For CEOs, storm clouds are on the horizon
Fortune’s CEO Initiative met virtually yesterday to discuss the economic outlook. The conversation is difficult to summarize in 300 words, but it is clear that while business continues to boom across many sectors, there are storm clouds on the horizon. A few takeaways:
“You’re not going to get to a zero COVID world. It’s just not going to happen. But it’s okay, because (of) the tools that we have at our disposal to be able to manage it.”
—Robert Ford, CEO, Abbott
“(Workplace) flexibility is going to be used by companies as a source of attracting competitive talent.”
—Chano Fernandez, co-CEO, Workday
“In New York, we had an optional reconnection event and a majority of our employees showed up. It was actually very emotional. People were seeing people, for the first time, many met each other for the first time. And they were very appreciative of that, so I think you give them the work flexibility and the interactive ability as well. I think that’s going to be very important.”
—Mindy Grossman, CEO, WW
“I think companies, really this time, they’re the ones asking (for climate action), and saying for god’s sake, do something about it, because we need some kind of a framework.”
—Francesco Starace, CEO, Enel
“It is a dog’s breakfast of a situation. It is a real mess. Weeks added to the transportation cycle from Asia. $20,000 containers versus what used to cost $1500 to take it across the Pacific Ocean. Hundred of ships outside of LA in Long Beach, and then no trucks or truckers when you finally get your ship to the port.”
—Jim Loree, CEO, Stanley Black and Decker
“I think that we are at an inflection point, not just in the country but in most of the world, as we transition to low carbon technologies. So I think the demand on supply chains will be higher for longer because we’re in an industrial revolution.”
—Tamara Lundgren, CEO, Schnitzer Steel
“There’s sort of this realization that we all need to continue to expect the unexpected.”
—Joe Ucuzoglu, CEO, Deloitte U.S.A.
Later in the day, I spoke with Daniel Glaser, CEO of Marsh McLennan, and asked him how he evaluated the risk environment. “In my 40 years in the business,” he responded, “risk awareness in the C-Suite has never been higher.”
I finished the day at the Committee for Economic Development’s Distinguished Leadership Awards, which recognized the contributions to fighting COVID of CVS CEO Karen Lynch, Otis CEO Judy Marks, Ariel Investment CEO John W. Rogers Jr., Synchrony executive chair Margaret Keane, Bank of America CEO Brian Moynihan and Moderna co-founder Noubar Afeyan. Afeyan, a descendant of Armenian genocide survivors, brought the room to its feet by saying that the post-pandemic world is “a period of great consequence,” noting five million people have died from the virus, and that there are “challenging times ahead for those of us who are survivors.”
More news below.
The flood of Facebook news continues this week. On Monday, whistleblower Francis Haugen was in the U.K. parliament to talk about the company, arguing that the only way to fix the company is to alter its business model, as CEO Daily's own David Meyer writes. Meanwhile, during the company's Q3 results, Mark Zuckerberg hit out at media criticism, and tried to draw attention to Apple's privacy standards. Interestingly, he also said Facebook would now prioritize younger users of its services—even as young people have been losing interest. Shares, meanwhile, were still up 20% this year. Expect more to come today.
Hertz's big deal
Rental company Hertz's order of 100,000 Teslas is behind the car manufacturer's valuation jump to over $1 trillion—surprising even Elon Musk. The deal, which will see the company spend $4.2 billion, also pushed up Hertz's own stock price. Tesla shares are up over 40% since January—even as electric-vehicle competition is building momentum. Fortune
It's less than one week to COP26, and the U.N. is warning that the world is still—as things stand—on track for a 2.7 degree celsius temperature rise by 2100, which is, in a word, bad. But the national net-zero pledges are still coming in: yesterday, from Saudi Arabia, today, from Australia. The coal-producing country has long been a climate laggard, and Fortune's Eamon Barrett points out that the new plan is not exactly robust. Prime Minister Scott Morrison, after announcing it, refused to commit the pledge to legislation. Fortune
Amazon's spy deal
Details have been leaked of a deal inked by Amazon's cloud service to supply a system to the U.K.'s three intelligence services. The deal is part of the intelligence services' efforts to pick up the pace on using A.I. and data, but it raises worrying questions about sovereignty, experts say, and whether a private company should even have such a role. In the U.S., that question has already been answered—AWS has been supplying the CIA and other intelligence services since 2013, and last year that deal was extended to other tech giants including Microsoft and Google. FT
AROUND THE WATER COOLER
Don't listen to Jack
It's the Twitter battle over hyperinflation and deflation we can't stop watching. Cathie Wood, of Ark Invest, has now squared off against Twitter CEO Jack Dorsey, arguing that he's wrong in predicting hyperinflation. Wood goes against many in the market: she argues that the falling cost of A.I. and a short-term oriented lack of investment will ultimately drag prices down, as Fortune's Sophie Mellor writes. Fortune
A new study by the National Bureau of Economic Research found that the top 10% bitcoin miners control 90% of the mining capacity, and the top 0.1%—about 50 miners—control 50%. Meanwhile, the top 10,000 investors control about a third of all Bitcoin in circulation. Overall, the world of Bitcoin is "still dominated by large and concentrated players", the study found. Fortune
Puppy boom profits
Fortune's Phil Wahba returns to the pet beat with this interview with the CEO of the e-commerce site Chewy, which has ridden the wave of the pandemic pet boom. The company has expanded into vet care and other lines, but is still not quite making a profit. Refreshingly, Sumit Singh points out that eventually doing so is important. "I think a lot of e-commerce companies get kind of drunk on growth and then think that it'll go on forever," he notes. Fortune
United Airlines is ponying up about $1.4 million every two weeks to cover paid leave for pilots who refuse to get vaccinated—because their vaccinated colleagues refuse to work with them. The airline is in the midst of a lawsuit on their policy of mandating vaccinations for U.S. employees, with the plaintiffs arguing that vaccinated pilots should not even be told if their co-pilot is unvaccinated. Fortune
This edition of CEO Daily was edited by Katherine Dunn.
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