Monday, September 30, 2019

raceAhead: Leaders on Impeachment?

On culture and diversity in corporate America.

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September 30, 2019

CNN is under fire, and deservedly so, for this short segment on a group of moderate House Democrats who shifted their position from no to yes on an impeachment inquiry of President Donald Trump. “These five freshman congresswomen changed history by becoming unlikely leaders on impeachment,” runs the headline.


The group in question are seven first-time representatives, all of whom have national security and/or military bona fides, and who explained their decision in a collective opinion piece published by The Washington Post.


“We have devoted our lives to the service and security of our country, and throughout our careers, we have sworn oaths to defend the Constitution of the United States many times over. Now, we join as a unified group to uphold that oath as we enter uncharted waters and face unprecedented allegations against President Trump,” they write. They detail their thinking which boils down to this: “The president of the United States may have used his position to pressure a foreign country into investigating a political opponent, and he sought to use U.S. taxpayer dollars as leverage to do it.”


It was signed by Reps. Gil Cisneros of California, Jason Crow of Colorado, Chrissy Houlahan of Pennsylvania, Elaine Luria of Virginia, Mikie Sherrill of New Jersey, Elissa Slotkin of Michigan, and Abigail Spanberger of Virginia.


The CNN segment focuses only on the five women, who are true and legitimate “badasses,” and who have all served the country in extraordinary ways. And, they are continuing to do so in their conservative-leaning swing districts. This fact is truly unimpeachable.


But the story was not merely an inspiring one of female friendship navigating a strange new world — parts of which are terrific.


It also frames them as surprise saviors of the republic, erasing the many people who have been far ahead of them on this issue, not to mention their two male colleagues who are taking a similar political risk.


Things truly fell apart for me around the three-minute mark, when journalist Dana Bash asked if the group of lawmakers should be considered “the anti-squad.”


What was clearly implied was that they were civilized antidotes to four other first-time members—Reps. Ilhan Omar of Minnesota, Alexandria Ocasio-Cortez of New York, Rashida Tlaib of Michigan, and Ayanna Pressley of Massachusetts—all women of color who have been loudly calling for the President to be held accountable on a number of fronts.


And all of whom have been the subject of vicious and racist attacks from the president himself.


The comments on the segment were unsparing.


“This is truly unacceptable. Give the credit to @RepAlGreen for being the first to seek articles of impeachment & doing so repeatedly, & @RepRashida@RepMaxineWaters for boldly demanding impeachment early & fearlessly facing down Trump's brutal taunting & insults in response,” tweeted Sherrilyn Ifill , the President & Director-Counsel of the NAACP Legal Defense and Educational Fund.


“This piece talks about how supporting impeachment puts their seats at risk. Meanwhile, the women of color who have been leading the way on this are getting DEATH threats, left and right. I wish I were numb enough not to be frustrated by this totally predictable mess," tweeted activist, educator, writer, and Pod Save The People co-host Brittany Packnett.


To make matters worse, the women profiled appeared to take the bait.


“None of us is ever going to get in a Twitter war with anyone else,” Slotkin told CNN, in response to “the squad” question. “If we have a concern with someone, we’re going to go right up and talk to them about it and we’re not going to add unhelpful rhetoric to an already bad tone coming out of Washington.”


“I don’t care who has the headlines,” Spanberger said. “I care about the legislation that we prioritize and I don’t think any of us want to be the loudest voice in the room. I just want to be one of the most effective.”


Ouch. 


Politics is a tough business, and everyone needs to speak to their voter base. I'd like to believe that there is some six-dimensional chess playing going on behind the scenes, and this is political theater. I'd like to believe that everyone is in on the joke.


That said, the optics of this entire episode is unfortunate.


The best thing I can say is that it was a missed opportunity to share the credit on an issue of vital national interest and to help pull fellow Congressional newcomers out from under the wheels of a very dangerous bus. Right now, it feels like politics as usual.


Ellen.McGirt@fortune.com
@ellmcgirt


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On Point


Facebook falling short of promise to allow researchers to study disinformation on the site  CEO Mark Zuckerberg promised Congress in April 2018 that the company would make huge troves of data available to researchers around the world, so they could study the disinformation campaigns that had targeted vulnerable populations and impacted elections around the world. Now, months later, Facebook says it's having trouble sharing the data while protecting user privacy. It's a big problem say experts. "Silicon Valley has a moral obligation to do all it can to protect the American political process," said Dipayan Ghosh, a fellow at the Shorenstein Center at Harvard and a former public policy adviser at Facebook. "We need researchers to have access to study what went wrong."
New York Times


Time to cancel TikTok? A Guardian investigation reveals that the Chinese-based app, TikTok, has expanded their moderation guidelines to ban any content that could appear to be positive to LGBTQ people or civil rights, including same-sex couples holding hands. This would even apply to places where homosexuality is not illegal. These come on the heels of recent guideline changes that ban speech on topics and speech sensitive to China, including Tiananmen Square and Tibet. If you aren't already outraged, click through for what's already banned for conservative countries, like "partially naked buttocks," cleavage with "a length of more than 1/3 of the whole cleavage length," and most anything about sanitary pads.
Guardian


Allyson Felix is fast, y'all Felix won a gold medal yesterday as part of the winning U.S. team in the first world championships mixed-gender 4x400m relay. It was her twelfth gold medal, but her first as a mom and advocate for pregnant athletes. She also broke her tie with Usain Bolt for most gold medals won in the history of world championships. "So special, to have my daughter here watching means the world to me," Felix said. "It's been a crazy year for me." Her daughter Camryn, who was shy of four pounds at her emergency C-Section on November 28, spent her first 29 days in the NICU. Click through and celebrate.
NBC Sports


California governor signs bill that will let college athletes get paid Gov. Gavin Newsom has signed Senate Bill 206, introduced by Sen. Nancy Skinner (D-Berkeley), which will allow California athletes to earn money from the use of their names, images, and likenesses. The controversial measure has earned praise from NBA stars LeBron James and Draymond Green, and sent shockwaves through the National Collegiate Athletic Association (NCAA) who have long opposed the move. "As more states consider their own specific legislation related to this topic, it is clear that a patchwork of different laws from different states will make unattainable the goal of providing a fair and level playing field for 1,100 campuses and nearly half a million student-athletes nationwide," the NCAA in response. James says nah. "Athletes at every level deserve to be empowered and to be fairly compensated for their work, especially in a system where so many are profiting off of their talents."
Los Angeles Times


On Background


The shofar heard at Auschwitz It is a nearly impossible tale of bravery, faith, and resistance, and the daughter of a Holocaust survivor's work to keep the story alive. Dr. Judith Tydor Schwartz, who is an expert on the Holocaust, says her father, Chaskel Tydor, was able to assign work assignments at some 40 Auschwitz subcamps far enough away from prying ears, to send the faithful to distant points where they might be able to pray during Rosh Hashana in 1944. But to signal the High Holy Days requires the use of a shofar, a ram's horn trumpet with a distinctive sound. "But could camp prisoners have found ways to sound [the shofar] piercing the heavens with sob-like wails and staccato blasts, without putting themselves in immediate mortal danger?" asks Ralph Blumenthal. Click through for the full story.
New York Times


Clinical trials lack racial and ethnic diversity The editors of Scientific American are blunt: It's unethical and risky to ignore racial and ethnic minorities, they say. The numbers are equally stark. While 40% of Americans belong to an ethnic or racial "minority," clinical trials are typically 80% to 90% white. "The symptoms of conditions such as heart disease, cancer and diabetes, as well as the contributing factors, vary across lines of ethnicity, as they do between the sexes," they explain. Without a diverse group to study, it's impossible to know if a drug will work, or worse, if there will be side effects. A Congressional remedy, the National Institutes of Health Revitalization Act, required the agency to include more women and people of color in their studies. That was 1993. But a 2014 study showed that only 2% of more than 10,000 cancer trials conducted by the National Cancer Institute focused on a racial or ethnic population.
Scientific American


Long distance running is a predominantly white sport. Who knew?  Joe Gray is a champion long-distance trail runner, with 16 U.S. national championships and 28 international races under his belt, and the winner of the 2016 World Mountain Running Championships. But yet, he and other non-white athletes can't get the traction they need to soar in the sport. "[Y]oung black runners (and other minorities) don't seem to get the attention, media coverage, opportunities, or grassroots access to the sport white athletes do," he says in this opinion piece. And when black runners are seen in editorial and advertising, they often use influencers or models to portray them. "Social influencers and models are not helping to inspire minority youth to shoot for the stars and to aim for excellence in their sport," he says. "True inspiration comes from seeing someone accomplish an amazing athletic feat in something you share a passion for—especially when we're talking about a running brand or media outlet."
Runners World


 


 


Tamara El-Waylly helps write and produce raceAhead.


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"They were saying my hair was ugly, it was nappy, they were saying that I don't deserve to live, that I shouldn't have been born. I was feeling pretty traumatized but I also felt compassion for them, because I felt like if I was in their point of view, something could have happened to them to make them want to do this."

Twelve-year-old Amari Allen on the three white classmates who attacked her, held her down and cut her locs.


 


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Term Sheet: Sep. 30, 2019

Our daily brief on deals and dealmakers.

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September 30, 2019

When I was first immersing myself into the world of tech reporting, I was confused as to why on earth you'd invest in a pre-product, pre-revenue, pre-pretty-much-anything-you-need-to-start-a-business company. "God, Polina, it's about the potential upside of being so early," they said. Ah, OK. 


My next question had to do with why investors would continue to back a company when there was no profit anywhere in sight. I was then informed that I wasn't thinking like a venture capitalist. "It's not about the profitability," they said. "It's about the growth and the path to profitability."


We have now seen what happens when that path to profitability is actually a dirt road to doom. Venture capital firms of "unicorns," or private tech companies valued at more than $1 billion, have a much higher tolerance for valuing fast growth over profitability, but that's not exactly how things work in the public markets.


It turns out idealism is not a good substitute for profit. Neither is purpose, creativity, inspiration, energy, or happiness. I recently wrote about how Oprah-speak has become so common in S-1 filings that it's practically become its own literary genre. Even so, there's no alternative for good, old profitability. 


As Fortune's Alan Murray noted in this morning's CEO Daily, Peloton shares are trading 15% below their Wednesday IPO price. Seven of the year's 10 biggest IPOs prior to Peloton are under water, having lost some $45 billion of their one-time value. The biggest losers? Lyft and Slack, down 53% and 42% respectively. The surprise winner: Beyond Meat, which is up 237% from where it started.


In the olden days, public market investors have typically expected companies to become profitable within 18 months or so of an IPO. This timeline has been loosened as fast-growing startups make their public debut with S-1s that warn: "We expect our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability."


It's somewhat of a celebrated mindset for entrepreneurs to have. Just last week, Peloton CEO John Foley said, "[Investors] want high growth — and in our case hyper-growth — so we plan to delight investors that see that our decision to prioritize growth over profitability is a good one." On the day of his comments, Peloton's stock closed 11.2% lower than the IPO price.


"In the public markets as a whole, profits do matter more than in the private markets," Mark Mahaney, managing director at RBC Capital Markets, told me in June. "In the public markets, you’ll see a very broad range of investors — people who are willing to invest purely for growth and others who are looking for capital safety or capital accumulation. The general rule is that the public markets do have a stronger screen for profitability — or a path to profitability — than you have in the private markets."


The average IPO return for 2019 has dropped to 6%, down from 30% at the end of June and 18% from two weeks ago. Recent deals suggest that public market investors have become much more selective about which money-losing companies to back.


"People's radar for yoga babble is on high alert right now," Scott Galloway, a marketing professor at New York University, told The New York Times.


So if a company's CEO begins to sound like your "yoga instructor went into investor relations," think twice before making your bet.


DIRECT LISTING HYPE: A group of Silicon Valley elite will meet for an invite-only event tomorrow in San Francisco to discuss "the benefits of the direct listing approach to a public listing." (The direct listing allows shareholders sell existing stock directly to the public, leaving investment banks to serve merely as advisers in the process and not underwriters.)


Notable participants in the "symposium" include:
— Barry McCarthy, the CFO of Spotify
— Michael Lewis, the author of The Big Short, The Blind Side, and Flash Boys
— Michael Moritz, investor at Sequoia Capital
— Bill Gurley, general partner at Benchmark
— David Schellhase, general counsel at Slack
— Greg Rogers, partner at Latham & Watkins who worked on both Slack and Spotify's direct listing


My colleague Michal Lev-Ram recently published a feature on the trend. She writes, "Longer term, perhaps direct listings will actually be a catalyst for more companies to go public, or to go public faster, which could have benefits for all involved—VCs, founders, investment bankers, and other shareholders." Read it here.


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VENTURE DEALS


- Kenna Security, a San Francisco-based enterprise company focused on risk-based vulnerability management, raised $48 million in Series D funding. Investors include Sorenson Capital and Citi Ventures.


- Moneyfarm, an Italy-based digital wealth management company, raised 36 million pounds ($44.4 million) in funding. Investors include Poste Italiane and Allianz Asset Management.


- Beyond Pricing, a San Francisco-based pricing platform for vacation property rentals, raised $42.5 million in funding. Bessemer Venture Partners led the round.


- AMBOSS, a Germany-based medical technology company, raised €30 million ($33 million) in Series B funding. Investors include Partech, Target Global, Cherry Ventures, Wellington Partners, and Holtzbrinck Digital.


- Gatsby, a Berkeley, Calif.-based platform for building websites, raised $15 million in Series A funding. CRV led the round, and was joined by investors including Trinity Ventures, Mango Capital, Fathom Capital, and Dig Ventures.


- Kenzie Academy, an Indianapolis-based online and in-person coding school, raised $7.8 million in Series A funding. ReThink Education led the round, and was joined by investors including Revolution's Rise of the Rest Seed Fund.


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HEALTH & LIFE SCIENCES DEALS


- Meissa Vaccines, a South San Francisco-based developer of vaccines to prevent viral respiratory infections, raised $30 million in Series A funding, from Morningside Ventures.


PRIVATE EQUITY DEALS


- Blackstone Group will buy Colony Industrial, the industrial real estate assets and affiliated industrial operating platform of Colony Capital, for $5.9 billion. 


- Transportation Insight, which is backed by Gryphon Investors, acquired TSG, a Suwanee, Ga.-based transportation management business. Financial terms weren't disclosed.


- Italmatch Chemicals, a portfolio company of Bain Capital Private Equity, agreed to acquire Water Science Technologies, a Birmingham, Ala.-based blender and chemical solutions provider for the North American oil and gas and industrial water treatment industries. Financial terms weren't disclosed. 


- Francisco Partners agreed to acquire Orchard Software Corporation, a Carmel, Ind.-based developer of laboratory information systems and healthcare software solutions. Financial terms weren't disclosed. 


- LLR Partners made an investment in Corestream, a Naples, Fla.-based platform for connecting employees with voluntary benefits. Financial terms weren't disclosed. 


OTHER DEALS


- Forever 21 Inc, a Los Angeles-based women's apparel retailer, filed for Chapter 11 bankruptcy protection in the U.S. Read more.


- Tencent will acquire a 29% stake in Funcom, a Norway-based video game development company. Financial terms weren't disclosed. Read more.


IPOs


- Anheuser-Busch InBev raised $5 billion from offering shares of its Asian operations through an IPO in Hong Kong. Read more


- Vir Biotechnology, a San Francisco-based biotech focused on immunologic therapies for infectious diseases, plans to raise $150 million in an offering of 7.1 million shares priced between $20 to $22. It posted revenue of $10.7 million and a loss of $115.9 million in 2018. ARCH Venture Partners and SoftBank back the firm. It plans to list on the Nasdaq as "VIR." Read more.



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EXITS


- Naxicap Partners will acquire Siblu Villages from Stirling Square Capital Partners. No financial terms were disclosed. Financial terms weren't disclosed. 


- Gryphon Investors said Sept. 30 that it agreed to sell its portfolio company ECG Management Consultants, a San Diego-based provider of strategic, operational, financial, and technology-related consulting services to health systems, to Siemens Medical Solutions USA Inc, a subsidiary of Siemens Healthineers AG. Financial terms weren't disclosed. 


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