By Alan Murray and John Kell
June 15, 2017

Good morning.

Martin Sorrell, founder and CEO of the advertising giant WPP, was Fortune’s featured guest at a dinner in London last night. The U.S., the U.K., and China are WPP’s biggest markets, giving Sorrell a close view of developments in all three. His take: political volatility in the U.K. and the U.S. have handed China “an incredible opportunity to exercise greater influence, politically, socially and economically” in the world.

In an interview with me during the dinner, Sorrell said neither the Conservative Party nor the Labour Party manifestos in the U.K. election gave business any reason for optimism. They are both “treating business more as regulated utilities,” he said. And uncertainty over Brexit is also a damper on business.

As for the U.S., Sorrell, who is active in the Business Roundtable and the Business Council, said the Trump administration has been far more open to business than the Obama administration. But self-inflicted set-backs are squandering the opportunity for action. “Because they control the House and the Senate, they should, in theory, be able to” pass pro-business legislation, he said. “But of course, there are all the missteps we’re seeing.”

“All of this presents a tremendous opportunity for China; a tremendous opportunity,“ Sorrell said. In particular, he said many Chinese Internet companies, and particularly e-commerce companies, have moved “way in advance” of what he sees at “legacy companies” in the West: “This sort of feeling that we in the West are more sophisticated is very, very misplaced.”

The London dinner was part of the run-up to the Fortune Global Forum, which is being held in Guangzhou December 6-8. You can find more information here.

News below.

Alan Murray
@alansmurray
alan.murray@fortune.com

Top News

Uber’s open COO job in the spotlight

With CEO Travis Kalanick taking a leave of absence from Uber, the vacant job of chief operating officer takes on a lot more importance as the company frames the position as key to solving its woes. Kalanick in early March announced he was searching for a COO to help run the ride-services company. But in the months since, Uber has suffered a string of controversies and embarrassing setbacks and the job has remained unfilled. It is part of a leadership vacuum that extends through the company and up to the board of directors. Executive recruiters and tech investors agreed that the job might look more appealing now than it did before former U.S. Attorney General Eric Holder’s report that recommended sweeping changes. Still, it remains unclear if the company can attract top talent while Kalanick retains both the CEO title and, along with two allies, voting control of the company.
Reuters

Yellen deflects on length of tenure

Federal Reserve Chair Janet Yellen declined to say whether she would serve a second term at the helm of the U.S. central bank if asked to stay on by President Donald Trump. “I fully intend to serve out my term as chair,” Yellen said at a press conference in Washington. She added: “I have not had conversations with the president about future plans.” Yellen’s four-year term as chair expires on Feb. 3. Trump has not indicated if he’ll re-appoint Yellen or name his own choice to lead the U.S. central bank, though he told the Wall Street Journal in April that he’d not ruled out keeping her in place. Yellen, meanwhile, has said she hoped the White House would move soon to nominate candidates for three current vacancies on the Fed’s Board of Governors. She also hopes that the Senate will consider those nominations “expeditiously.”
Bloomberg

Mattel CEO outlines her strategy

Margo Georgiadis, a former Google executive, told investors on Wednesday that the ailing toy maker behind iconic brands including Barbie and Fisher-Price would get back on track by placing firmer bets on emerging markets, a faster pace of toy development, and by focusing more on the digital play experience. “It is time to reinvent this company because of where the world is headed,” Georgiadis told Fortune. “As an industry, we all are challenged to do things differently.” Georgiadis, CEO since February, is steering Mattel after a difficult few years even as total rival Hasbro last year reported record-breaking sales and is now worth almost $6 billion more than Mattel.
Fortune

Bank of America enacting layoffs

Bank of America has begun laying off employees in its operations and technology division, part of the second-largest U.S. bank’s plan to cut costs. Though the bank wouldn’t specify the number of jobs lost, many of the cuts came from the company’s Charlotte, N.C., headquarters. The job cuts come as Bank of America is aiming to cut costs to boost financial targets Chief Executive Brian Moynihan has set. And while Bank of America says it is also hiring, the employees that it is trying to reduce cost more than those who are joining. The bank has also been cutting costs by shuttering data centers and moving information to less costly systems run by technology firms.
Reuters

Amazon reportedly interested in buying Slack

Bloomberg has reported corporate chatroom startup Slack Technologies has received recent inquiries about a potential takeover from technology companies including Amazon.com, citing people with knowledge of the situation. A deal could potentially give Slack a valuation of at least $9 billion, those people said, though an agreement isn’t assured and the discussions may not go further. Slack—which has 5 million daily active users—raised $200 million in its latest funding round in 2016, valuing it at $3.8 billion. The company, which introduced its business chat software in 2013, earlier this year debuted an enterprise version of its chat software that allows tens of thousands of employees to collaborate across teams at major corporations.
Bloomberg



Around the Water Cooler

Artificial intelligence is finally taking off

After decades of disappointments, artificial intelligence is starting to deliver real-life benefits to the early-adopting companies. That’s the take from management consulting firm McKinsey, which reports that the entrepreneurial activity unleashed by these developments drew three times as much investment in 2016—between $26 billion and $39 billion—as it did three years earlier. Most of the investment in AI consists of internal research and development spending by large, cash-rich digital-native companies like Amazon, Baidu, and Google. But while billions have been spent on AI, most of the adoption outside of the tech sector is at an early, experimental stage. And only a few firms have deployed it to scale. Companies that haven’t yet adopted AI technology at scale or in a core part of their business, McKinsey says, are unsure of the returns they can expect on an AI investment.
McKinsey

Ford exec: Self-driving cars are safer

U.S. cities will look a lot different in 20 years, at least when it comes to public transportation. That’s according to Bryan Salesky, the CEO of the self-driving car company Argo AI, which became a Ford Motor subsidiary after the auto giant said in February it would invest $1 billion in the startup. Salesky, speaking at a conference in California, said the rise of self-driving cars will usher a “much safer mode of transportation” by “removing the human from the loop.” Human drivers are more prone to distractions and errors in their judgement to autonomous cars in the future, he believes. The technology could also result in cities needed less parking spaces and people who buy self-driving cars could potentially have the option to convert those vehicles into autonomous taxis when they don’t use them.
Fortune

Whole Foods CEO laments activist investor’s involvement

John Mackey, co-founder and CEO of Whole Foods, was interviewed for an extensive profile by Texas Monthly that greatly highlighted the executive’s feelings of being the target of an activist investor. Jana Partners amassed a nearly 9% stake in Whole Foods’ stock and announced it would put pressure on the company to either overhaul its business or sell itself—either to a grocery rival like Kroger or a less traditional name like Amazon. The push comes as Whole Foods has faced sales challenges as other grocers, including Wal-Mart, have stocked more of the organic produce that Whole Foods made mainstream. “These people, they just want to sell Whole Foods Market and make hundreds of millions of dollars, and they have to know I’m going to resist that,” Mackey said in an interview. “That’s my baby. I’m going to protect my kid.” He also added that he felt that the timing hijacked his recent book tour, as the CEO and his PR team found themselves shifting into crisis mode, rather than traveling to celebrate the executive’s vision as a food thought leader.
TexasMonthly

Summaries by John Kell; john.kell@fortune.com; @johnnerkell

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