Good morning.
At the Fortune CEO Initiative last month, we had a lively conversation about the financial pressures public companies face to perform in the short term—often at the expense of the long term. It’s a well-known lament among CEOs.
But what about those rare companies that manage to rise above the pressures, and keep their sights firmly focused on the future? Today, Fortune celebrates those companies, by publishing its first annual list of The Future 50. Created in conjunction with BCG’s Henderson Institute, which spent two years researching the topic, the list is based on a screen of 2,300 publicly traded companies, which were scored based on two equally-weighted measures: First, a calculation of the market’s estimate of the company’s future potential (the proportion of its market value not attributable to current earnings and dividends); and second, a calculation of the company’s capacity for long-term growth, based on 14 factors that BCG found correlated with long-term performance. You can read more about the methodology, which included an AI scan of 70,000 10-K reports, here.
Enough with the windup. The top ten big companies (market value over $20 billion) on The Future 50 are:
- Salesforce
- Tesla
- Netflix
- Intuitive Surgical
- VMWare
- Edward Lifesciences
- Intuit
- Activision Blizzard
- Regeneron Pharmaceuticals
You can see the other companies on the list here. Spoiler alert: it includes Alphabet and Amazon… but not Apple. As for companies with less than $20 billion in market cap (at the time of the screen), top of the list were Veeva, Workday, Grubhub, FireEye, and Zillow. We think there are lessons here for all of today’s companies, which feel the constant pressure to reinvent themselves. To learn those lessons, you might start by reading Adam Lashinsky’s excellent story on our number one, Salesforce, and its CEO (and Fortune magazine’s November cover boy), Marc Benioff.
By the way, number 18 on the smaller company list is ServiceNow, whose CEO John Donahoe—former CEO of eBay—was in to visit this week. In keeping with the goals of the CEO Initiative, he says he’s working on transforming his rapidly-growing enterprise software firm into a purpose-driven company—more evidence of the steadily surging trend.
News below.
Alan Murray @alansmurray alan.murray@fortune.com
Top News
•Black Monday Remembered
It’s 30 years since the ‘Black Monday’ crash put an end to the Wall Street party of the 1980s. With the Dow Jones having closed above 23,000 for the first time Wednesday, with long-term interest rates heading higher and tensions with Iran escalating, there is no shortage of superficial parallels. More importantly, the crash was the first caused by computerized trading programs, and for all the damage it caused, you will look in vain for any evidence that it stopped, or even meaningfully delayed, the adoption of new technology in finance or anywhere else. Skeptics of machine learning and big data, take heed. Bloomberg
•Mnuchin Threatens a Market Crash in the Absence of Tax Reform
The date wasn't lost on Treasury Secretary Steven Mnuchin, who threatened another market crash if Congress failed to pass a convincing tax reform. The idea that the market has discounted more than the administration is likely to deliver has gained a lot of credence in recent weeks, but in truth the rally owes as much to the strength of the global economy (China notched 6.8% GDP growth in the 3rd quarter earlier this morning), and persistently loose monetary policy in Europe and Japan as anything else. Fortune
•JohnFlannery’s Lessons in Burden-Sharing
John Flannery isn’t just grounding the company’s fleet of business jets, he’s killing a company car program for some 700 top managers and an annual three-day beano in Boca Raton, too. The WSJspeculates that this is a prelude to a set of quarterly data that will show the conglomerate in worse shape than widely thought. But the recognition that top managers need to share the burden is at least welcome. The comparison with Thomas Winkelmann, the CEO of Air Berlin, is instructive: customers of the collapsed airline have been left sitting on worthless tickets without compensation, while the company paid months ago to insure the full value of the CEO’s 4.5 million euro contract in the case of insolvency. Fortune
•Ken Chenault Is Stepping Down At Amex
Ken Chenault, will step down as CEO of American Express early next year, after what will be a tenure of nearly 17 years. He’s going out on something of a high, having helped the company through the loss of its most important strategic partner, Costco, in 2015. But his successor, Stephen Squeri, inherits a position where the company is being squeezed not only by the likes of J.P. Morgan’s Sapphire program, but also by pure payment companies from Visa and Mastercard to Paypal and the massed ranks of fintech upstarts. Fortune
Around the Water Cooler
•Unilever, Nestle Show Their Vulnerability
Third-quarter results from Europe’s two biggest consumer groups showed exactly why disruptive investors and industry rivals have been sniffing around them. Unilever’s underlying sales rose a mere 2.6% (compared to the 3.9% expected), with developed market weakness overshadowing 6.3% growth in emerging ones. Nestle, by coincidence, posted the same underlying sales growth of 2.6%, and said the full-year figure wouldn’t be any better (last year, it was 3.2%). It also took another 500 million Swiss francs of restructuring charges. Unilever’s shares fell by 5%, Nestle’s by 0.7%. Reuters
•LSE CEO Isn’t Staying Around for Brexit
Xavier Rolet, the widely respected head of London Stock Exchange Group, will step down by the end of 2018. That's a mere three months before the U.K. is set to throw itself off the Brexit cliff into what, for the financial services industry, will be a debilitating legal vacuum. Rolet has built a $14 billion business but his biggest deals—with the Toronto Stock Exchange and Deutsche Boerse—both slipped through his grasp, and he leaves with serious question marks still hanging over crucial businesses such as derivatives clearing. Fortune
•Blue Apron Job Cuts
Blue Apron said it would lay off 300 workers, around 6% of its workforce, and take a $3.5 million restructuring charge, after a tumultuous three months since it floated. Its shares, which have fallen 43% since the IPO in late June, fell another 1.5%. The company has been unable to shake off concerns that Amazon will, if you’ll pardon the phrase, eat its lunch after its acquisition of Whole Foods. Fortune
•Madrid Plays Hardball With Catalonia
Catalonia clarified that it hasn’t yet declared independence, but renewed its threats to do so if Madrid continues to refuse "dialogue." Spain’s central government, sensing weakness, said it will invoke Article 155 of the constitution on Saturday, allowing PM Mariano Rajoy to impose direct rule on the region. Over 800 companies have reportedly moved their legal headquarters out of the region since the disputed referendum on independence on Oct. 1, including its two largest banks, Caixabank and Sabadell. Fortune
Summaries by Geoffrey Smith; geoffrey.smith@fortune.com
@geoffreytsmith
