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How He’s Leading the Fight Against Poverty p. 94

The World’s

50 Leaders greatest

p. 67

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Stay, but move up.

April 1, 2016 Volume 173 Number 5

ginsburg: nik k i k a hn—the washington post/gett y im ages; k elly a nd kor nienko: nasa v i a a p; gates a nd desmond-hellm a n n: joe pugliese—august im ages; gr iest a nd h av er: jessica mcgowa n—gett y im ages; k ejr i wa l: pa rth a sa rk a r—x inhua pr ess/cor bis; legend: rya n pfluger—august im ages; cullors, ga r z a, a nd tometi: ben ba k er—r edu x; trude au: patr ick av en tur ier—gett y im ages; mer k el: h a ns chr isti a n pl a mbeck—l a if/r edu x; ch a i: tao xi aofa ng—im aginechina; sa ba n: chr isti a n petersen—gett y im ages; book: m a nfr ed koh; book im age: courtesy of h achette book s


The World’s 50 Greatest Leaders 67 This election year has given us a taste of what leadership is, mostly through its absence. Demagoguery, pandering, even populism aren’t leadership. Here’s what is. By Geoff Colvin

70 Bezos Prime Amazon’s CEO has driven his company to all-consuming growth (and even, believe it or not, profits). Today, though, as he deepens his involvement in media and space ventures, Jeff Bezos is becoming a power beyond Amazon. That has forced him to become an even better leader. By Adam Lashinsky

80 The List By Jonathan Chew, Claire Groden, and the Fortune staff

94 I Will Follow

Book Excerpt:


My Year in Startup Hell Hear the one about the unemployed middle-aged guy who tripped and fell into the new economy? An exclusive sneak peek at the book Disrupted. By Dan Lyons


Irish rock icon Bono leads a widely acclaimed, datadriven, global organization that rallies governments and C-suites, raising millions for people in poverty. What’s his secret? An ability to convince others that they are the true leaders of change. Here’s what business can learn from a music legend. By Ellen McGirt



April 1, 2016 Volume 173 Number 5


Macro 8 Closer Look The IRS and the terrible, horrible, no good, very bad decade. By Jen Wieczner 12 In Memoriam A tribute to Andy Grove, Silicon Valley pioneer. By Adam Lashinsky 14 Underdogs How a small English soccer team is storming the big leagues. By Geoffrey Smith

18 Chasing Utopia Inside the debate over the U.S. productivity slump. By Erika Fry



22 World’s Most Admired Companies Netflix is on a growth streak, but the stock has been volatile. Here’s why. By Lauren Silva Laughlin


53 Restaurant Stocks Not every company on the menu is an equally good deal. By Chris Taylor

41 Person of Interest McDonald’s chief digital officer, Atif Rafiq. By Michal Lev-Ram 31 How I Got Started Four Seasons founder Isadore Sharp on building great service. Interview by Dinah Eng

Venture 27 Bouncing Back The unexpected payoff of entrepreneurial failure. By Jennifer Alsever


pursuits 34 Smart Travel The best apps for summer trips. By Christopher Tkaczyk 36 Black Book An insider’s guide to São Paulo. By Adam Erace

42 In Conversation Facebook exec Fidji Simo discusses her latest project: Facebook Live. By Leena Rao 44 A Boom With a View The co-dependency of tech giants is equal parts helpful, harmful, and vexing to consumers. By Erin Griffith 47 Business in the Cloud Machine learning is turning commercial satellite imagery into an omnipresent source of business intelligence. By Clay Dillow

58 High-Yield Debt After a nerve-racking downturn in junk bonds, investors are rethinking their strategy. By Lauren Silva Laughlin 6 EDITOR’S DESK 116 BING!

CORRECTION In the intro to an excerpt from Bob Benmosche’s posthumous memoir, Good for the Money (March 15), we misstated the date of the author’s death. Benmosche died Feb. 27, 2015. Fortune regrets the error.

i l l u s t r a t io n b y ERIC NYQUIST

sh a r p: k endr ick br inson

16 Keeping Up With the Kremlin A new bus tour spotlights homes of the London kleptocracy. By Linda Kinstler

20 Executive Read A Q&A with AOL co-founder Steve Case about his new book, The Third Wave. By Anne VanderMey

editor’s desk

Searching for Leaders THE FIRST THING you’ll notice about our 2016 World’s 50 Greatest Leaders list is that it doesn’t include any of the current candidates for President. That’s not an accident. The U.S. political system is broken, and we see little reason to think the current contenders can fix it. Start with Donald Trump and Bernie Sanders. It’s stunning that, well into the 21st century, the two candidates generating the most enthusiasm are throwbacks to the 20th. One is channeling a fascist strongman, the other running as a self-styled socialist. Neither has the vision or skills to take us into the future, but both have tapped into the public’s deep dissatisfaction with the recent past. The financial crisis and its aftermath left many Americans disillusioned with government and left government unable to address even the most tractable problems. A key turning point came on Aug. 5, 2011, when Standard & Poor’s downgraded U.S. Treasury debt for the first time in history after congressional leaders failed to provide even the inklings of a plan for tackling the nation’s debt. That and subsequent failures have handed Trump and Sanders supporters their strongest talking point: Could it get any worse? Hillary Clinton talks about building bridges instead of walls and has built a record of bipartisan cooperation in her post–First Lady life as a senator and secretary of state. But by repudiating the trade agreement she once championed, she has undermined the bipartisan legacy of her husband’s administration. And by mimicking her primary opponent, she has become even more polarizing than her storied name had already made



April 1, 2016

her. Then there’s Ted Cruz, who celebrates, even as he exacerbates, Washington’s dysfunction. He who governs best, Cruz believes, governs not at all. Sadly, this dispiriting election is happening at a time when the nation— and the world—desperately needs leadership. “Ours is a world in disarray,” Council on Foreign Relations president Richard Haass wrote recently in Time, citing the unraveling of the Middle East, the refugee crisis in Europe, and the rise of China in Asia. Meanwhile, the U.S. economy needs policies that build on our great strength— an unparalleled culture of creativity and innovation— while shoring up our weaknesses, such as failing public education, crumbling infrastructure, and the aforementioned dysfunction of national government. The good news is that Fortune’s search for great leaders was not in vain. Even in Washington, we found some—including House Speaker Paul Ryan and Supreme Court Justice Ruth Bader Ginsburg. While unyielding in their competing worldviews, they each

have that key quality of empathy essential for today’s challenges. From the business world, we’ve included Salesforce CEO Marc Benioff, who recognizes that the current political climate also demands a different kind of business leadership and a more compassionate form of capitalism. Indeed, in all walks of life—from Lin-Manuel Miranda on Broadway to Larry Fink on Wall Street to Stephen Curry on the basketball court—great leadership is thriving. Our list starts on page 67. Not everyone will agree with all of our selections, but I have no doubt you’ll find them inspiring. A final word on our first choice, Amazon’s Jeff Bezos. His company got pummeled in a New York Times story last year depicting Amazon as a sort of high-tech sweatshop, where the pressure caused workers to break down at their desks in tears. As Adam Lashinsky’s profile shows, Bezos certainly places heavy demands on his people, and it’s unlikely Amazon will ever show up on our 100 Best Companies to Work For list. But leadership comes in various flavors, and the Bezos strain is yielding world-changing results. A surprisingly capable leader has been at the center of them.

alan murray Editor @alansmurray

p ho t o g r a p h b y WESLEY MANN

OUR WORLD REVOLVES AROUND YOU Welcome to our Business Class, where your comfort is our priority. AIRFRANCE.US

APRIL 1, 2016


Once upon a time in the land of the free, The IRS gathered trillions from you and me …


The IRS and the Terrible, Horrible, No Good, Very Bad Decade By Jen Wieczner

A series of unfortunate events



THIS IS A STORY about the

Internal Revenue Service, an 84,000-employee government agency with a job that’s as vital as it is hard to love—securing the trillions of

dollars in taxes that make the government run. And these days, it’s an agency down on its luck: plagued by angry politicians, frustrated taxpayers, hordes of identity thieves,

APRIL 2006



MAY 2013

The IRS declares its $20.5 million project to develop a new, web-based Electronic Fraud Detection System a failure after delays and refocuses all its efforts on restoring the old system.

Andrew Joseph Stack III, a 53-yearold computer engineer, crashes his plane into an IRS building in Austin in a suicide attack.

Hackers breach South Carolina’s Department of Revenue, stealing data on nearly 4 million taxpayers who filed their returns electronically. The state blames the IRS’s lax encryption policies.

Scandal erupts when an IRS official admits to targeting Tea Party groups for additional inspection—prompting national outrage.

illustr ation: rya n snook


But the taxmen were cash-strapped,

And the people got angry. “Be right with you,” they were told.

Their coffers were bare. They had no money for staffing,

There were hacks, there were scandals,

Tech upgrades were rare …

And lots of waiting on hold.

and—more recently—hackers. The IRS’s latest and perhaps most spectacular foray into disaster was an online feature called Get Transcript. The tool, which for the first time allowed taxpayers to download their records directly from, was supposed to be the happy ending to the decades-long struggle to bring the IRS’s J.F.K.-era legacy technology into the

Internet age. But in February the bureau announced that hackers had used Get Transcript to steal the personal information of 724,000 people. The hack, it turned out, was six times as damaging as the IRS initially thought when it detected the breach and shut down the tool last May. Also in February, another attack used 101,000 stolen Social Security numbers to

fraudulently generate PINs for electronic filing of tax returns. No IRS data were exposed, but in the wake of that scare the agency disabled another online tool with which certain taxpayers could retrieve a separate PIN they had been assigned for identity protection purposes. The episodes illustrate the immense technological challenges facing the agency,

which—even as annual tax receipts have risen to more than $3 trillion—still uses half-century-old magnetic tape to store and process tax return records, as well as versions of Windows so old that Microsoft abandoned upkeep for them years ago. A political tug-of-war over funding has hamstrung the IRS’s ability to protect its data against a growing

JUNE 2014


MAY 2015




The IRS says it can’t provide emails relating to the Tea Party audits because they were destroyed in a computer crash.

A National Taxpayer Advocate report warns that budget cuts, which have slashed the IRS staff by 12,000, have led to the worst customer service levels since 2001.

The IRS announces that a major initiative, Get Transcript, has been hacked and shuts it down.

An IRS employee who worked with taxpayer victims of identity theft is arrested and accused of stealing taxpayer identities herself. (She pleaded guilty in February.)

The IRS discloses another cyberattack in which hackers used 101,000 stolen Social Security numbers to generate PINs in an attempt to fraudulently e-file tax returns.

The IRS announces that the Get Transcript hack was actually six times as damaging as originally thought, and compromised the data of 724,000 people.


battery of threats for more than a decade. The IRS has an $11.2 billion budget for fiscal 2016, less than its budget in 1995 adjusting for inflation. Years of cuts also became easier to rationalize after 2013 accusations that the IRS inappropriately targeted Tea Party groups. The IRS was cleared of allegations of criminal wrongdoing in the case last October—the U.S. Department of Justice said that the IRS had screwed up but that “ineffective management is not a crime.” Budget cuts have also handicapped the IRS’s capacity to answer consumers’ phone calls. Last year its telephone service fell to an all-time low, with just 38% of callers able to get through and an average wait time of more than half an hour. And while congressional funds for the agency’s technological infrastructure and staffing dwindled, official complaints of tax identity theft doubled last year— helped along by exponential growth in scammers impersonating the IRS. (One of the IRS’s own employees pleaded guilty in February to stealing taxpayer identities.) After all, the U.S. Treasury is the mother of all piggy banks: “We are basically attacked or at least probed over a million times a day,” IRS Commissioner John Koskinen tells Fortune. In part, the litany of technical snafus has come out of an effort to make the agency more cost-efficient. Get Transcript cost the






BERNIE SANDERS IS VYING to become the first major party

candidate running on a soundly pro-taxes platform since Walter Mondale. Sanders’ plan would lower aftertax income for the upper income quintile by 17%—a stark contrast to Ted Cruz’s plan, which would raise it by 14% (and raise the deficit $29 trillion by 2036). Hillary Clinton, meanwhile, would keep things about the same.




5% 0


–5 –10 –15


Under Sanders’ plan, someone making more than $142,600 a year would take home 17.2% less.




IRS just 40¢ per transcript request, compared with $45 to $55 per document requested the old-fashioned way. Multiplied by the 23 million transcripts ordered online last year, the savings was more than $1 billion annually. The IRS fast-tracked development, rejecting IT proposals for greater antifraud provisions such as facial recognition. “We were robbing our own cybersecurity budget … for Get Transcript,” says one former IRS official. It also didn’t help security that the programs had to be customer-friendly. In both recent attacks, thieves came in through the front door— using the very same ID system taxpayers were supposed

April 1, 2016






to use. They stormed the site en masse, using “bots” to fill out security questions. Ironically, the identity verification checks the hackers breached had also kept out 23% of legitimate taxpayers. With the new system that the IRS begins testing this month, Koskinen says he’ll be satisfied if just half of taxpayers can get through the enhanced barriers; the agency has even considered using biometrics for authentication. In his newly unveiled Future State plan, Koskinen envisions an online IRS portal with a suite of e-filing and online customer service tools for taxpayers. With $95 million in additional cybersecurity funding this year, the IRS is hiring 55 more IT experts and installing new detection software with more than 100 filters to flag suspicious activity.

Acquiring the tech expertise to make genuine improvements won’t be easy. The agency has struggled to recruit top tech talent from Google and Apple, while dealing with its own exodus of cybersecurity pros. A measure that allowed the IRS to lure specialists with salaries well above government pay expired in 2013, and the last 10 such IT hires, including the chief technology officer, will be gone in the next few months. That means the proverbial cookie jar could be left unattended just when the IRS can least afford another mistake. When people feel they’re safer not paying taxes than trusting the government with their data, says former IRS deputy commissioner Mark Matthews, “that’s where the real trouble starts.”

Florence Griffith Joyner (“Flo-Jo�) celebrating her victory

A lifetime of dedication, for a moment of victory

Focus Persevere Breakthrough




The pioneering engineer helped develop the semiconductors that remade modern computers.





April 1, 2016

business leader. He wrote gracefully—in Fortune—about his battle with prostate cancer. He mentored Intel’s leaders as well as entrepreneurs outside Intel’s walls, including Steve Jobs. The epitome of an American success story, Grove was profane, direct, argumentative, and full of mirth—often in one breath. His death is a reminder of a time when Silicon Valley’s disruptive products were tangible, life changing, and technically brilliant—if sometimes flawed. That description isn’t a bad epitaph for Grove himself. Intel was famous for a “copy exactly” manufacturing process. Its great leader was one of a kind. —ADAM LASHINSKY


grov e: ben ba k er—r edu x; v egeta bles: br igitte spor r er—gett y im ages

His death is a reminder of a time when Silicon Valley’s disruptive products were tangible, life changing, and technically brilliant— if sometimes flawed.

HOW DID Andy Grove make Silicon Valley what it is today? Let us count the ways. A brilliant polymath with a Ph.D. in chemical engineering—he was Dr. Grove when he wasn’t simply Andy— the longtime Intel CEO and then chairman taught the nerds about the importance of marketing. The public craved “Intel Inside” for reasons

it never could have articulated beyond Intel’s ubiquitous and convincing advertising. Grove helped popularize cubicle culture: If someone as mighty as the immigrant-turnedtechnology-titan didn’t rate an office, neither did you. He was the rare technologist who thrived as a business leader, a master strategist, and a popular explainer of his hard-won wisdom. Only the Paranoid Survive educated a generation of business leaders in the language of market analysis—the “strategic inflection point”— and in how to navigate the proper course through a crisis. Grove, who died at his home in Los Altos, Calif., on March21 at 79, was more than a

now spend $39billion a year on organic food (10 times higher than 20 years ago) in the hopes that it’s healthier than average fare. Is it? In March a U.K. study touting the benefits of organic milk and meat met with a swift backlash. “Headline-grabbing speculative health claims,” cried one British academic. In 2012 a Stanford University study found no strong evidence that organic foods are especially nutritious. Two years later, Newcastle University said that organics had higher key antioxidants—but the jury’s still out on how helpful they are. While scientists engage in a food fight, consumers have been persuaded. Organic food sales make up nearly 5% of the total food market. And a recent survey found 33% of consumers say organics are very important—even at a higher price.


GAMES WON per every $100 million spent on annual compensation


















By Geoffrey Smith


NGLAND’S RICH have had 50 years to digest the Beatles’ message that money can’t buy them love. But the Gulf sheikhs, the Russian oligarchs, and U.S. private equity wizards who own the bulk of Britain’s top soccer teams are now having to learn another bitter lesson: It can’t even buy you success. The clear leaders of the English Premier League as the season enters its final leg aren’t either of the mighty Manchester clubs, United and City (annual revenue: $568 million and $507 million, respectively, according to Deloitte), nor defending champion Chelsea ($460 million), nor Arsenal ($477 million), but the decidedly provincial minnows of Leicester City, which brought in a comparatively paltry $150 million last year. To get an idea of how unlikely its rise is, consider: The Leicester team that beat Chelsea 2–1



April 1, 2016


in December cost $33 million in player transfer fees to assemble. Chelsea, by contrast, spent $311 million on transfer fees. The overall wage bills are just as divergent (see graphic). When Leicester played Manchester City the following week, eight of the visitors’ players had a hiring fee that was more than the entire Leicester team’s put together. How did this happen? Leicester’s recruitment policy has been both lucky and good. Some credit the extreme fitness regimen that includes cryotherapy (exposing players to superlow temperatures) after games. But most of all, the team has been just that: a team, with a rare spirit and cohesion forged in a nerve-shredding battle last year against relegation to the minor leagues, and nurtured and focused this year by the canny management of Claudio Ranieri, its veteran head coach. Last season, the team spent a record four months at the bottom of the league, before their near-miraculous run

of seven wins in the last nine games. But the streak isn’t just due to talent. England’s richest legacy teams have stumbled lately, often spending too much on the wrong players. And the gap between rich clubs and poor has been narrowing for some time, particularly as the league’s fan base has gone global, leading to an influx of spending from abroad. Leicester’s run owes much to a 2010 takeover by Vichai Srivaddhanaprabha, a Thai billionaire with an empire of tax-free shops at airports in Thailand. Still, in a world where sports have become dominated by money and sterile quantitative analysis, Leicester’s unlikely success has made the club the feel-good story of the year. It’s also made the Premier League more unpredictable and more enjoyable—which, paradoxically, may make it more marketable too.


WHAT’S NEXT With modern, striking lines, standard Bi-LED headlights and an uncompromising sense of style, the 2016 Prius has an edge at every angle. Sleek is what’s next. Prototype shown with options. Production model may vary. ©2015 Toyota Motor Sales, U.S.A., Inc.


THE WAR OVER YOUR DATA IS HEATING UP APPLE v. FBI The colossus of Cupertino’s refusal to unlock an iPhone is still flummoxing the FBI. The company fears that making an exception—a tool to demolish device defenses—could indelibly wreck users’ privacy.

FACEBOOK v. BRAZIL Authorities briefly jailed the social network’s Latin America chief in March after failing to access a drug crime suspect’s WhatsApp messages. Facebook maintains it neither sees nor stores such information.


London Goes Oligarch Spotting A NEW TOUR SPOTLIGHTS HOMES OF THE RICH AND NOT-SO FAMOUS. IT’S CALLED THE Kleptocracy Tour. Organized by a coalition of anticorruption think tanks and NGOs, London’s newest bus tour rolls past the opulent homes of under-the-radar oligarchs living in (or at least investing in) splendorous British properties. Tourists onboard can take pictures of the Witanhurst mansion, valued at an estimated $450 million, owned by fertilizer baron Andrey Guryev. Or the $16 million apartment in Whitehall Court owned by Russian deputy prime minister Igor Shuvalov. According to Putin antagonist Alexei Navalny’s Anti-Corruption Foundation, the apartment costs approximately 100 times Shuvalov’s official annual salary. Other stops are more mysterious. There are 36,000


properties in London that are registered to offshore companies. According to Transparency International, one in 10 buildings in Westminster, the political heart of the city, has an owner whose identity is concealed. The tour’s creator, anticorruption activist Roman Borisovich, started the initiative after futilely campaigning for a public registry documenting the ultimate beneficial owners of London’s offshore companies. His aim, he says, is not just to call out oligarchs but also “to shine the light on those businessmen who derive their fortunes from [them].” Up next? He’s taking the operation to Miami and New York. —LINDA KINSTLER

No, not the late ’90s monopoly case, but a newer suit. The Redmond giant has rejected Justice Department demands to turn over customer emails stashed on Irish computer servers. —ROBERT HACKETT



EVER SINCE the price of oil started slipping in 2014, economists have worried about



April 1, 2016

bankruptcies among the nation’s highly leveraged oil and gas companies. Now, after the commodity’s nosedive, 2016 couldbe the year it comes to ahead. Deloitteestimates thata third of global oil and gas exploration and production

companies—with a combined debt of over $150 billion—are at high risk of default or bankruptcy. Thelarger financial impact, and thousands of attendant job losses, could make cheap gas a lot less thrilling.






AT RISK: 175 29 6 2013


7 2016

FEB. 2013

FEB. 2016


w ita nhurst: sov foto—uig v i a gett y im ages

Bankruptcies Loom in the Fracking Industry

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By Erika Fry

ERE’S A STUMPER: We live, as the Silicon Valley narrative goes, in an era of breathless disruption, speeding toward “frictionless” existence courtesy of Amazon, Uber, the iPhone, and sundry other modern wonders. Yet we also live, by the reckoning of many concerned economists, at a time of historically low productivity growth. Since 2010, productivity— essentially the output per hour of labor—has edged up an average 0.5% each year, according to the U.S. Bureau of Labor Statistics. That’s tiny compared with the increase from 1974 to 1994, when productivity climbed 1.6% a year on average, or from 1995 to 2004, when it rose 2.8%. Why do a few percentage points matter? Increased productivity—producing more with less through some technological or labor-related innovation—drives wage increases and raises living standards. Two recently published papers, one from the University of Chicago and the other from Federal Reserve economists, contend that



April 1, 2016

U.S. GDP would be $3 trillion higher, up 17%, had we maintained the 2.8% productivity growth rate of the late ’90s and early aughts. Silicon Valley, for its part, argues there’s a measurement problem, not a slowdown, and says big contributions from new technology are missing from the data. Both new papers disagree, though—one even found that with better measurement, growth would be slower. Why, at this time of great technological progress, is efficiency plateauing? Economists have only theories: A feel-good one is that we’ve seen less a slowdown than a “return to normal.” The soaring productivity experienced at the turn of the millennium had much to do with the wide adoption of revolutionary information technology. A more dour one, proffered by Northwestern’s Robert Gordon, is that America’s most produc-

tive years—propelled by game changers like indoor plumbing, electricity, the combustion engine, and the computer—have passed. Others speculate gains are hampered by conservative capital investment—in which recession-scarred corporations sit on mountains of cash. Alternatively, the OECD has nuanced research asserting that productivity is soaring at top multinational firms; it’s just the rest of the business world, slower to adopt innovation, that’s increasingly falling behind. Another theory? There is no slowdown. Nick Bloom, a Stanford economist, argues that others have sliced and diced the data in a way that falsely gives that impression, which sells well in the media. In any case, he says, there’s no need for doom and gloom. However disappointing the U.S.’s productivity stats may be, they’re not predictive of what’s to come.



THE POWERFUL TED Talk style has become so popular it has spawned a litany of books on how to do it (not to mention a parody subgenre). Now, though, TED chiefCHRIS ANDERSON has his own how-to. We plucked a few of Anderson’s top tips from his new book,TED Talks: The Official TED Guide to Public Speaking.

Nervousness can be an asset and can help get the crowd on your side.

Don’t sell anything; good talks are about ideas.

Make eye contact with people in the audience.

Humor creates a connection, but bad jokes are worse than no jokes at all.

Pare your focus down to one idea and connect each point to that theme.

i l l u s t r a t io n b y ERIC NYQUIST

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Call a Fidelity representative at 800.343.3548, go to or call your Advisor.

Before investing in any mutual fund or exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, offering circular, or, if available, a summary prospectus containing this information. Read it carefully. Past performance is no guarantee of future results. ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund. In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties. Lower-quality fixed income securities involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Foreign investments involve greater risks than U.S. investments, and can decline significantly in response to adverse issuer, political, regulatory, market, and economic risks. Any fixed income security sold or redeemed prior to maturity may be subject to loss. * Data accurate as of 06/30/2015. † As of 12/31/2015, Fidelity Total Bond Fund earned 4 stars based on its risk-adjusted performance, compared to 947 share classes within its Morningstar Intermediate Term Bond category; Fidelity Intermediate Municipal Income Fund earned 3 stars based on its risk-adjusted performance, compared to 298 share classes within the Morningstar Muni National Interm category. 1 For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of the funds in an investment category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) 2 The Morningstar Analyst Rating is a subjective, forward-looking evaluation that considers a combination of qualitative and quantitative factors to rate funds on five key pillars, which are process, performance, people, parent, and price. Gold is the highest of four Analyst rating categories. For the full rating methodology, go to Documents/AnalystRatingforFundsMethodology.pdf. For the reports, go to and 3 Each year, Kiplinger’s Personal Finance compiles a list of their favorite no-load mutual funds. The list includes 25 funds with seasoned managers, a proven track record, and low fees. Fidelity Total Bond Fund, Fidelity Intermediate Municipal Income Fund, and Fidelity New Market Income Fund were selected. © 2016 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for mutual fund performance, you should check the fund’s current prospectus for the most up-to-date information concerning applicable loads, fees and expenses. Fidelity Brokerage Services LLC, Member NYSE, SIPC. © 2016 FMR LLC. All rights reserved. 701416.7.0




played as pivotal a role as Steve Case. The head of the upstart company America Online in the 1990s, Case helped popularize the Internet for the average American household. He packaged free-trial CDs with steaks and made “You’ve got mail” an iconic tagline. He also, it has to be noted, brokered one of the most disastrous corporate mergers in history, between AOL and media giant Time Warner. In his new book, The Third Wave, Case outlines what today’s emerging tech companies can learn from the rise—and fall—of the old ones. Here, highlights from Case’s conversation with Fortune. —Anne VanderMey

Further re ading



What’s next? I think the third wave is going to be really integrating the Internet more seamlessly and pervasively in every aspect of our lives—the important things, like how we learn, how we stay healthy, how we get around. And while the software of course continues to be important, it’s not just about the software. Partnerships with other companies and institutions are becoming more important. For example, if you really want to revolutionize health care, it’s not just about the app; it’s also about partnering with doctors and hospitals.




By Angela Duckworth

By Duncan Clark

By Phil Knight

DUE OUT: May 3

DUE OUT: April 12

DUE OUT: April 26

The rock-star psychologist’s manifesto on why persistence, not talent, is the key to success.

A narrative account of how Jack Ma went from English teacher to leader of one of the world’s largest companies.

Nike’s legendary co-founder looks back on building an American icon.

Policy will also become a bigger deal because these are regulated businesses. In many cases, actually, the government is the largest customer, so a strategy of ignoring government— which is pretty common now—won’t work. How does this relate to AOL? Those dynamics about partnerships and policy and also perseverance were what really made the first wave possible. Without partnerships, the Internet never could have happened. Without the government, the Internet never could have happened. What do you think is going to happen to the companies that are huge today? Will they stick around? Some will, some won’t. Obviously I lived that with AOL, which was dominant at the first wave and lost ground in the second wave. Then there’s Amazon, which started kind of at the end of the first wave but reinvented itself. Some strong secondwave companies will do that. The sectors you say are ripe for disruption—food, hospitals, transportation, education, financial services—are pretty fundamental. You’re talking about a huge shift in the way we live in the near future. One thing that’s been striking is the pace of innovation, the pace of disruption, over the last 10 or 20 years—the things you can do now that you couldn’t dream about even 10 years ago. At the same time, when you’re looking at some of the industries that are the most important in terms of our lives, they haven’t changed in centuries. There, we’re at the beginning.

case: robert a tobi a nsk y—gett y im ages; book: m a nfr ed koh; cov er: courtesy of simon & schuster

IN THE ANNALS of American cultural history, few CEOs have

In this book you lay out an unconventional way of looking at technological progress. What are the “three waves”? So, the first wave really was just building the Internet— building the networks and servers and services that were the foundation, and building awareness about why you would want to get connected. It seems a little crazy now, but when we started AOL 30-plus years ago, only 3% of people were online, and they were online only an hour a week. In the past 15 years the second wave has been about building on top of the Internet with social and mobile. You’ve seen companies like Facebook emerge and Apple and Google usher in a mobile revolution. It’s been all about startups, clever products, and viral adoption.

Netflix CEO Reed Hastings




By Lauren Silva Laughlin

reappeared on Fortune’s World’s Most Admired Top 50 All-Stars list last month after a four-year absence. Responders to our survey, who are business insiders and C-suite executives, aren’t the only ones who have fallen in love, then out, then back in love. The company is in favor again because of a focus on innovation and stellar stock performance. An investor who purchased 100 shares 10 years ago would have seen his or her stake balloon from $2,200 to $73,000, with dividends reinvested. Even over the past year










MARCH 2015

MARCH 2016

the stock has given investors plenty to admire. Shares are up 63% from one year ago, though since December the stock price has fallen by a quarter, then jumped 19% from its February lows. In a day, shares can be up 5%, then down as much the next. Why the volatility? “It is one of the more confusing equities on the planet to figure out,” says FBR Research analyst Barton

ed, in Japan, for example, only 1% of respondents said they had used the company’s services. That might sound like an opportunity, but a whopping 57% said they were “not at all likely” to pay for streaming content, almost three times as many as in the U.S. Nevertheless, Mahaney is a firm believer, putting a $200 valuation on the stock, roughly twice its current price, in three to eight years. He points to Netflix penetration in markets like Germany and France that are “not necessarily known for being too U.S. culture–centric,” but where it has reached about 10% of viewers, a key hurdle to showing it has a “material presence in the market.” Crockett also believes American entertainment is exportable. “People around the world may love or hate America, but by and large they tend to love American entertainment,” he says. The trouble, he says, is that many of the grand expectations are already reflected in the stock price. Shares trade at nearly 83 times 2017’s projected earnings, and analysts are expecting profit to quadruple by next year. As he sees it, Netflix’s price won’t rise much unless it has another trick up its sleeve. Still, it is hard to find an analyst who doesn’t see CEO Reed Hastings as a visionary. He “invented two companies,” Mahaney says. “DVD by mail and the business that killed DVD by mail.” According to Crockett, he “will go down in history as one of the greatest entrepreneurs of all time. He is incredibly insightful, incredibly innovative, and has a remarkable ability to adapt.”

illustr ation by cr a nio dsgn; illustr ation r efer ence: m a r k neuling—cnbc/nbcu photo ba nk v i a gett y im ages



Crockett. Investors struggle for a couple of reasons. First, Netflix is pioneering an entirely new business. “We have never seen anything like this: a global direct-to-consumer video service with completely original content that is separate from the traditional TV ecosystem,” Crockett says. Netflix also has no direct publicly traded competitor for comparison. Amazon and Hulu have similar services, but both are owned by larger parents with other businesses that muddy the valuation. Within Netflix, its two main businesses are at dramatically different points in their development, making it even more difficult to pin down its stock’s worth. With more than 45 million subscribers, its U.S. business is mature and, more important, has become very profitable, allowing Netflix to invest $5 billion to create 31 new series this year. But its international unit, with about 30 million viewers, is still “deep in investment mode,” says Mark Mahaney, an analyst at RBC Capital. “Before they can generate $1, they have to spend money to get content to have a service that people would sign up for. By the nature of the beast, you have to invest upfront.” It’s this business that has investors perplexed. Crockett says the U.S. streaming service is worth about $25 a share, or a little over a quarter of the company’s current stock price. That implies the remaining value, or roughly $75 a share, comes from the international business, which represents 30% of revenue, and is projected to grow 65% by the end of 2016. It’s a leap of faith. According to a survey Mahaney conduct-

For the most critical questions. No matter how complex your business questions, we have the capabilities and experience to deliver the answers you need to move forward. As the world’s largest consulting firm, we can help you take decisive action and achieve sustainable results. Audit | Tax | Consulting | Advisory Copyright © 2016 Deloitte Development LLC. All rights reserved.




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APRIL 1, 2016


THE UNEXPECTED PAYOFF OF FAILURE Sure, flaming out in your own startup provides wisdom and experience. Now there’s proof of a surprising—and more concrete—benefit. By Jennifer Alsever IN RECENT YEARS the notion that failure brings rewards has become so venerated by business thinkers (and publications) that you could be forgiven for thinking yourself lacking if you haven’t suffered at least one calamitous, abject disaster in your career. In truth, people who have tried and failed at launching their own startup know that it incurs many unrecouped costs: time, sweat, emotion, and, most often, money. But new research reveals an unexpected reward for

i l l u s t r a t io n b y KEITH NEGLEY





those who abandon the entrepreneurial life. According to a paper by finance professor Gustavo Manso of the University of California at Berkeley, self-employment does, in fact, pay off—often in the form of higher wages when the person returns to work at another company. “You don’t need to be crazy to be entrepreneurial,” says Manso, who holds the school’s William A. and Betty H. Hasler Chair in New Enterprise Development. “There’s a reasonable payoff.” Manso analyzed the earnings of more than 5,000 Americans between 1979 and 2012, using data from the U.S. Bureau of Labor Statistics. They showed that the typical person makes less as an entrepreneur than he could earn at a bigger company. Most of those people go back to salaried jobs after two years or less—and that’s where it gets interesting. People who had been selfemployed at one point in their career did better financially compared with people who hadn’t, according to Manso’s research. Those who tried and abandoned entrepreneurship after less than two years weren’t punished financially when they moved to another employer. And those who lasted more than two years as entrepreneurs ended up earning 10% to 20% more than their peers. “Big companies are willing

to pay more because they believe they’ll get more bang for their buck,” says John Reed, senior executive director at IT staffing firm Robert Half Technology. In just the past few years he has seen increased demand for entrepreneurial recruits, especially among large companies. Former business owners often bring a broad set of skills gained from handling multiple problems, moving fast, and getting things done with limited resources. Says Reed: “Big companies need that different way of thinking.” That was the case for David Bloom, whose e-commerce software startup,, shut down last year despite $2.5 million in investment from Google and Techstars, industry accolades, and 40 employees. Failure couldn’t have worked out better for him. It turns out all the sleepless nights about meeting payroll and the long hours building software and doing customer research set him up for a big promotion. Before he started Ordrx, he had been a product director at American Express. When he returned to the workforce late last year, he nabbed a vice president job at Dow Jones, earning nearly double his previous salary. “What I got out of leaving was much more diverse professional skills than if I had stayed at American Express,”

For more coverage of entrepreneurs and practical advice on how to found and nurture a young company, turn to’s expanded new Venture section:



April 1, 2016



YOU’LL LEARN MORE A study in the Academy of Management Journal concluded that employees in NASA’s space shuttle program not only learned more from failure than from success but also retained the lessons longer.


IT COULD MAKE YOU HAPPIER Research by the University of Pennsylvania’s Wharton School of Business found that the average entrepreneur— whether successful or not—reported higher career and work-life satisfaction than salaried peers.

Bloom says. “A startup was a business education at warp speed every day.” Bloom says the entrepreneurial stint also gave him the confidence to apply for higher-level jobs at large companies and in a wider array of industries. Headhunters regularly call him for new job opportunities. “Big companies want that mix of startup and big-company experience,” he says. Failure, he says, is irrelevant to most hiring managers if you’re honest about why you failed and what you learned from it. “Just own it,” Bloom says, “because you went out and did it.” Running your own business can also help chart a completely new career path, as was the case for former entrepreneur Rachel Honeth Kim. She spent a year running Nailed Kit, a


IT CAN MAKE YOU MARKETABLE Big companies like GE and Coca-Cola are seeking to nurture entrepreneurial cultures. Hiring managers may want people who failed and learned from mistakes. Says Jerod Funke, an HR vice president at Tyco International: “Turning failures into successes down the road is something we view as an asset.”

startup that sold designer fingernail decals, before deciding she wasn’t passionate enough to continue long term. She discovered she hated the back-office tasks of budgets and taxes, but she excelled at getting press for her startup in a number of national beauty magazines. When she went back to the workforce, she applied for high-level public relations jobs, despite no formal training or past PR positions. (Most of her 10-year career was spent in marketing.) Yet Kim landed a senior-level job heading all the communications for Gusto, a 300-person online payroll company. Plus, she says, she received a 20% pay raise from her last salaried job. “It’s my dream job,” she says, “but I never would have gotten it if I hadn’t been an entrepreneur.”

I’m glad I missed my delivery. Said no one ever. Nobody likes to worry about missing a delivery. UPS Access Point locations give today’s customers the convenience of picking up and dropping off deliveries at more than 8,000 neighborhood businesses across the country. Just one of the many ways UPS is helping companies solve for today’s rising customer expectations. See how we can help you at TM

Copyright ©2016 United Parcel Service of America, Inc.

Revitalizing downtown takes the same ingenuity as moving a bass guitar across town. When Portland was ready for a new light rail system, they went to the people to crowdsource ideas. Ideas like adding more space for bikes, wheelchairs and guitars. Siemens not only builds custom trains designed for a city’s unique needs, it keeps them running on time, efficiently and reliably— supporting commuters, neighborhoods and new businesses in Portland and around the country.


© Siemens, 2016. All Rights Reserved.


Sharp at his winter home in Palm Springs

BUILDING GREAT SERVICE AT THE FOUR SEASONS How ISADORE SHARP constructed a chain known for an otherworldly level of customer attention. Interview by Dinah Eng

p ho t o g r a p h b y KENDRICK BRINSON



knew nothing about the hospitality industry when he started building hotels in 1961. But he had an instinct for what customers wanted and the willingness to go to great lengths to get it for them. To achieve the quietest rooms, for example, he made sure no plumbing touched concrete. To encourage personalized service, he gave everyone from parking attendants on up the authority to act instantly when a guest makes a request. That


commitment to service has become the hallmark of the Four Seasons chain. Sharp, 84, remains chairman of the company, which manages 96 hotels and resorts (they collectively generate $4 billion in annual revenue) in 41 countries. To this day, he says, if developers want to launch a new Four Seasons, “we control what will be built and hire the people who will work there. We don’t franchise the name.” Sharp’s story: I never thought about going into business. My parents were immigrants who had moved from Poland to Israel in the 1920s, then to Canada, where I was born in 1931. Downtown Toronto back then was a Jewish ghetto, and my father built houses. My mother would take in boarders, and if someone liked the house, she’d sell it. So we moved 15 times by the time I was 16. During the summers, I’d work construction with my father and enjoyed it. I went to Ryerson Institute in Toronto and studied architecture because I thought construction was going to be my career. After graduating, I went to work with my father. Many parts of our lives are circumscribed by chance events and coincidences. In 1955 a friend decided to build a small motel and hired me to do it. I thought, If a motel on a limited-access highway was successful, why wouldn’t it work downtown? So I decided to build a motel





in the inner part of the city. It took me five years to convince anyone to invest in it. Fortunately, my brotherin-law, his friend, and my dad each put up $90,000. I borrowed $125,000 from the Bank of Nova Scotia and got the rest from Cecil Forsyth, head of Great-West Life Insurance. We leased furnishings and got the sub-trades to wait for part of their money until the hotel opened. The hotel cost a couple million dollars to build—so talk about leveraging a deal. We charged $10 to $12 a night, a far cry from what we charge today. I didn’t know anything about the hotel business, so I hired a general manager. To me, it was just a real estate deal, a motel that I’d open and probably sell. But I knew what I wanted it to be, in terms of the nature and

style of the place. I thought we should welcome customers and treat them like guests coming to our home. The motel became a great little success, so I decided to try a second. This time, it would be a 200-room resort on the outskirts of Toronto. By then my earnings barely covered my rising family costs, but the Bank of Nova Scotia lent me $600,000; Great-West Life, the mortgage company, and my tradesmen all went along. We named it the Inn on the Park, and it became a success as well. To celebrate, my wife, Rosalie, and I took a vacation in Europe. It was 1963, and we were on a strict, limited budget, so we decided to average costs. One night we’d stay in a city’s worst hotel, and on the second night we’d stay in the best

CREATING A “GOLDEN RULE” CULTURE Sharp’s philosophy has made Four Seasons a perennial on Fortune’s list of the 100 Best Companies to Work For.

To motivate employees togive…

…customers personalized service, we should treat our employees the way we expect them to treat our customers.

When we upgrade a hotel…

…we first upgrade employee facilities. Nonsupervisory workers meet with hotel general managers regularly. Workers give suggestions for streamlining systems.

When we have to downsize…

…in recessionary periods, people see how we manage the process. We keep in touch with those we let go, and when things get better, we bring them back.

People’s expectations…

… are different in every country, but the culture of operating under the Golden Rule fits everywhere because it fits in the scriptures of every religion.



April 1, 2016

hotel. In London we stayed at the Dorchester, and I was blown away by it. When we returned to Toronto, I happened to talk to a builder who worked for the Robert McAlpine Company, which owned the Dorchester. That connection led to a deal to build a London hotel that we would run. The Inn on the Park London opened in 1970 and was voted the best hotel in Europe after its first year of operation. I knew it was because we’d established a new level of service that differentiated us from the competition. Things didn’t always go as planned. In 1974 we committed to building a $25 million hotel in Vancouver that we would lease after it opened. Unfortunately, unexpected inflation kicked in, and we couldn’t make the numbers work. The owners of the land were three corporations. I told them I couldn’t pay for the cost to finish the project or the rent I’d owe them. The owners rewrote our agreement so we could all survive, and I borrowed more money to complete the hotel. That near-ruinous experience taught me that the financial risk of building and owning hotels was too great. That’s when I decided to move from construction to the hotel business. So now we are a management company with a small interest in owning the hotels. Throughout everything, I had a wife who never complained, and she picked up the load of being there for our four children. In 1978 our teenage son Chris died of melanoma. The loss of a child to sickness changes you forever. After Chris’s death, Terry Fox’s run across Canada to raise money for cancer, despite a leg being amputated due to cancer, truly inspired us. One of the

more meaningful legacies of my life was establishing the Terry Fox Run, which raises money for cancer research. In 1986 I decided to take the company public. I saw it as an opportunity to create liquidity in the ownership group, and another way to create exposure and brand value. Things went well until 1990, when Iraq invaded Kuwait and the West plunged into a deep recession. Our American business fell off, dropping our net profit from $17 million in 1990 to $2.8 million the next year. When the economy recovered, we continued to expand. I had never sold any of my ownership shares, but in 1994 I decided to liquidate some of them for financial planning, so I sold 25% of the company to His Royal Highness Prince Alwaleed Bin Talal Bin Abdul Aziz al Saud of Saudi Arabia, who offered a 25% premium over the stock price at the time. Some years later the prince spoke to his friend Bill Gates, and the three of us took the company private in 2007, in a deal valued at $3.4 billion. I wanted to create stability and certainty for the future by having ownership that would never have to sell again. I know that the legacy of the company is in solid hands, and I now own 5% of the company. The world is now full of terror, and at no other time in our lives have we had such uncertainty. Business is able to bring people together across barriers because commerce benefits everyone. So business practices can have a profound influence on the world. Real success is dependent on how many people’s lives have been improved because of a company, and I’m proud of the many lives that Four Seasons has touched.


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APRIL 1, 2016

Pursuits SM A R T T R AV EL

users’ treks—such as a walking tour of Jaipur, India, or the best driving route to discover the German castles between Albstadt and Sigmaringen. Free.



Travel Tech By Christopher Tkaczyk



April 1, 2016

CLARICE This concierge app is a handy travel guide with curated suggestions for the best sights, restaurants, and shopping for four types of trips: business, pleasure, romance, or a family visit. It includes selfguided walking tours

LIVE TREKKER It has been said that the best way to explore a city is to get lost in it. Perfect for flaneurs, LiveTrekker helps curious wanderers keep a diary while they explore a city by foot. Create audio and text notes and post photos and videos to log your route as you wend through the urban jungle. There’s no need to jot the name of that charming garden café you discovered; just snap a pic, and the GPSenabled app will help you return to it later. Share your route or download other

BRAVOLOL PHRASEBOOK This app is a musthave for travelers who don’t speak the local tongue. It has hundreds of key basics in 13 languages, including traditional and simplified Chinese. Listen to audio pronunciations and then record and play back your own voice to hear how you sound. Extra categories can be accessed by upgrading to the pro version for $4.99 per language. It even includes important phrases for romance, suchas“CanIbuyyou a drink?” and “Leave me alone.”Free.

i l l u s t r a t io n b y ALEXANDER WELLS

a ll a pplication icons courtesy of the compa nies

The best apps for summer travel planning.

FARECASTING is a game as much as a science. To win that game and maximize your summer vacation budget, start looking for airfares now. My preferred go-to is Google Flights, followed by Kayak and Hopper. There’s also a new service called DealRay that sends text messages to your phone with breaking fare news, so you won’t miss those $29 offers from JetBlue and flights to Asia for less than $400, including taxes. At $10 a month DealRay is pricey, but it could eventually pay for itself if you find a rock-bottom fare deal. Here are a few other tools that can help with finding great airfares— and figuring out what to do once you get where you’re going.

One of the best apps on the market that analyze an archive of data, Hopper spots trends in airfare prices and predicts the best time to pounce on low fares. Once you plug in your preferred departure and destination info, Hopper pulls up a color-coded multimonth calendar that presents the best time to fly at the cheapest cost. It also tells you when to expect prices to rise or fall. It will watch a trip for you and send alerts when the price drops. Free.

and mapped routes for a morning run, and themed itineraries feature Woody Allen’s New York City and a gin lover’s tour of London. The downside? It’s available for only 12 cities in the U.S. and Europe—and unfortunately the avatar for Clarice looks nothing like Jodie Foster.Free.

This app is a great resource for travelers seeking pet-friendly hotels, a local vet, outdoor restaurants, or parks and beaches that allow animals— as well as the nearest pet store. It will even help you determine whether a hotel permits larger dogs and if there are additional fees tied to a pet stay. The only thing it won’t do is take Fido for a walk— though it can help you find a local pet sitter or dog walker.Free.

PURSUITS / Black Book

of cocktails in São Paulo (try the Brasil Apple Smash). Coffee break: When I’m shopping at Galerie Melissa on Oscar Freire Street, I always stop to visit Santo Grão Café. It’s the best coffee shop in the area, and their beans make an excellent souvenir. Look for the house mix Blend Santo Grão.



See são paulo in a Day Heading to Rio for the Summer Olympics? Don’t miss Brazil’s biggest (and best) city. By Adam Erace AN EIGHT-YEAR VETERAN of Brazil’s hospitality industry, Samuel

Campos calls the electric city of São Paulo the most vibrant in the country. As a concierge at the modern, ark-shaped Hotel Unique, he knows all the spots for his guests passing through the busy (and unexpectedly beautiful) business hub.

the Parque do Ibirapuera. It has a magnificent collection of photographs, paintings, and clothing from five centuries of African immigration.

Toughest dinner reservation: If we’re contacted far in advance we usually can get you a reservation at D.O.M., the only two-Michelin-star restaurant in Brazil and ninth on San Pellegrino’s 50-best list. Chef Alex Atala’s tasting menu is a masterpiece featuring Brazilian ingredients. O

2 [ 1 ] Brazil’s business capital is home to 12 million paulistanos. [ 2 ] The Afro Brazil Museum houses more than 6,000 artifacts.


Under-the-radar museum: The Afro Brazil Museum is fascinating and is located in


O Things to avoid:Monday is the worst day to arrive in the morning from the airport. It takes around two hours to the main business district. Plan your arrival for Sunday, when there is no traffic from the airport whatsoever. Also, to avoid the Zika virus, wear long clothing that minimizes skin exposure and apply mosquito repellent periodically.





Watering hole: SubAstor is one of the classier spots in Vila Madalena. You enter through the boteco, a typical neighborhood bar, and go down into the low-lit basement. There you will find the best list O

Locals’ secret: Even some paulistanos don’t know the Sesc Pompeia, a cultural center in the west zone of São Paulo designed by architect Lina Bo Bardi. There are community classrooms,apopularrestaurant andbar,atheater,areadingroom, andaverticalsportscomplex. O

April 1, 2016

WE ASKED SAMUEL CAMPOS TO PLAN A SINGLE, SPECTACULAR DAY IN SÃOPAOLO… Our private car will take you to a helicopter landing, where you’ll take an outstanding one-hour sightseeing flight. Flying over São Paulo will give you views of the most iconic buildings in this huge city, including the stunning Edifício Copan, designed by Oscar Niemeyer’s firm. After the flight, enjoy lunch at Maní with some of the best dishes in town, followed by shopping on Oscar Freire Street. You’ll meet Flavia Liz, who runs the most exclusive personal guide team in the city. Her customized tours focus on subjects like street art, design, and architecture, and even go inside the favela slums. Have an unforgettable dinner at Kinoshita, a Japanese restaurant headed by the very friendly chef Tsuyoshi Murakami. To end the night, get a drink at the breathtaking Skye Restaurant & Bar on our rooftop. For a longer, interactive version of this story, go to

i l l u s t r a t io n b y MARTĺN LAKSMAN

conr a do tr a mon tini—gett y im ages; museu m: courtesy of hotel u nique

Best new restaurant: A Casa do Porco’s motto could be “Welcome to Porkland.” Headed by the well-known chef Jefferson Rueda, this is a oneof-a-kind, no-reservations gastro bar. I strongly recommend it for people who are looking for authentic dishes and great artisanal beers. I always order the aged pork tartare. O

O Urban escape: Easily accessible by car, Praia de Pernambuco is a calm beach with a magnificent landscape in Guarujá, a coastline city situated about 60 miles away fromSãoPaulo.It’sagreatoption for a day trip from the great urban center on a sunny day.

© 2016 Starwood Hotels & Resorts Worldwide, Inc. All Rights Reserved. Westin and its logo are the trademarks of Starwood Hotels & Resorts Worldwide, Inc., or its affiliates. *3pm late checkout based on availability.



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APRIL 1, 2016

drone: nick y loh—bloomberg v i a gett y im ages


Atif Rafiq Chief Digital Officer, McDonald’s AGE: 42 HE’S LOVIN’ IT: Rafiq left Amazon two years ago to become the fast-food chain’s first chief digital officer. His mission? Transform its business with technology. “We know where we have strength and what people know us for. We’re not trying to get into something that’s foreign to us.” SPECIAL SAUCE: The former Kindle Direct Publishing chief built a digital unit from scratch, recruiting hundreds of techies from Google, Amazon, and others. He also sparked partnerships with Silicon Valley players like Postmates,

TICKER TAPE A collection of curiosities

which will deliver McNuggets straight to your McHome. NEW WAYS TO LOVE: Recent initiatives include handsfree payments and automated kiosks where customers can order their food. “We’re constantly looking at major trends.” SUPERSIZED: Rafiq’s rapidly expanding team now includes offices in Chicago, San Francisco, and other major cities. HE BELIEVES IN MAGIC: In March, Rafiq created a virtual-reality experience that let people step into a Happy Meal. “VR is relevant to us.” —Michal Lev-Ram

2.8 MILLION DRONES EXPECTED SALES IN THE U.S. THIS YEAR, A 149% INCREASE FROM 2015 source: consu mer technology associ ation

p ho t o g r a p h b y BENJAMIN RASMUSSEN




the roof. People spend three times more time watching videos when they are actually live. But a much better measure of success was every individual on my team saying that they had amazing experiences using it or watching live videos of musicians, politicians, or celebrities. We haven’t been this excited about something in a long time. How are people using Live? Chef Mario Batali is using it to ask viewers to submit their four favorite ingredients in comments, and he creates custom recipes for them on the fly. Sara Seager, an astrophysicist and planetary scientist, is going live from Discovery’s page to answer questions about the solar system.


Fidji Simo The talented Facebook executive, who leads the teams responsible for video and ads in its News Feed, discusses her latest project: Facebook Live. By Leena Rao

When Fidji Simo’s 6-month-old daughter tried solid foods for the first time, the infant’s grandparents were able to watch the expression on her face. The moment didn’t take place in person, though—Simo, 30, instead broadcast it using her iPhone and Facebook Live, the social network’s new video-streaming service. Video is key to the company’s bid to maintain its rapid growth: Already 500 million people watch 100 million hours on Facebook every day. Can it catch up to Google’s YouTube and Twitter’s Periscope? We spoke to Simo.

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April 1, 2016

Where did the idea for Facebook Live come from? We received requests from celebrities for new ways to engage their communities. A lot of them were trying to do Q&As on their own; live video seemed like the right format to do that. We launched it for public figures in August, then opened it up to media companies. Once we had data showing that people were actually watching these videos, we rolled it out more broadly. How has the response been? Celebrities posting live videos would see their engagement and commenting go through


What’s behind its growth? The size of Facebook’s audience is a big factor in Live’s growth. Media companies and public figures want to go where the audience is. There’s also the social connection. When you are viewing a broadcast, you can see who of your friends is watching. What kind of technology issues have you faced? Live video is a very big technical challenge, and it takes a lot of infrastructure. We still have a long way to go. And there are some things, like poor Internet connections, that are out of our control. Will you monetize Live? It’s still very early. We want to build a sustainable ecosystem before making any decisions. It’s not out of the question. p ho t o g r a p h b y BRAD WENNER




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the line between love and hate The co-dependency of tech giants is sometimes helpful, often harmful, and reliably vexing. By Erin Griffith


ANY INVESTORS would rather buy Puerto


Follow Erin Griffith on Twitter (@eringriffith) or at



April 1, 2016

illustr ation by a lex eben mey er

Rican bonds than try to take on a tech titan in its prime. Amazon owns e-commerce. Google is synonymous with search. Facebook dominates social media. Tech is a winner-take-all game, and as the Internet economy matures, building a winner from scratch looks less promising by the day. Even new categories like on-demand transportation and lodging quickly declare victors. Uber, founded in 2009, is worth $62.5 billion. Airbnb, just a year older, is valued at $22.5 billion.

This ultra-Darwinian environment is bad news for aspiring also-rans, but it hurts you and me, the lowly users of tech products, the most. We’re stuck with whichever services a handful of powerful conglomerates give us. The top 10 apps of 2015 are owned by just three companies, according to Nielsen: Facebook, Apple, and Alphabet, Google’s parent company. Throw in Amazon for good measure, and it’s difficult to imagine using the Internet without the “big four.” But nothing is simple in the interconnected world of technology, and we consumers want to use services how we choose. We expect to be

able to conduct a Google search on an Apple iPhone, for example, or watch a YouTube video within Facebook. That means tech’s big guns must play nice with one another, even as they compete in increasing ways. Call them frenemies. The dynamic helps explain why Amazon is trying to crush Netflix with its streaming-video service as it sells the company cloud storage for that service. It also explains why I can’t watch Transparent, a show produced for Amazon Prime Video, using my Apple TV— and why I can’t buy an Apple TV on The turf wars between social media companies have been especially malicious. In 2012, Facebook-owned Instagram stopped allowing its photos to show up inside the Twitter app. Twitter pulled a similar move the year prior, excluding its content from Google’s search results after the two companies failed to strike a deal. (Access has since been restored.) Today, Facebook doesn’t explicitly attribute the news items it curates from Twitter, preferring instead to use the vague “social media” as the source. The reasons behind these moves are often as petty as you might expect. One executive offended another. One company believed a frenemy had copied its work. One frenemy actually did copy another’s work. And, yes, whining about things like share buttons and platform integrations seems just as trivial. But there are few alternatives to the services offered by the big four. Tech’s giants have trained us to expect whatever we want, whenever (and wherever) we want it. But in a winnertake-all world full of tech frenemies, the consumer often winds up with little choice at all.



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The View from Above Machine learning is turning commercial satellite imagery into an omnipresent source of business intelligence.

satellite im ages: courtesy of digita lglobe; woz ni a k: bur a k a k bulu t— a na dolu agenc y/gett y im ages

By Clay Dillow


ACEBOOK HAS A vested interest in

helping the 4.2 billion people who still lack reliable Internet access find their way online. But when the social media company launched an effort in 2013 to provide connectivity to some of the world’s most remote and disconnected regions, it immediately ran into a problem. Facebook knew these disconnected billions existed— just not precisely where in the world they were.

So the Facebook Connectivity Lab team set out to find them. Using technology similar to what allows Facebook to recognize faces in photos uploaded to its service, the company sifted through more than 14 billion geospatial images captured by satellite imagery provider DigitalGlobe. The resulting maps reveal the locations of more than 2 billion disconnected people spread across 20 countries, many of them developing

nations where even basic mapping data is scarce. Facebook’s ambitious foray into geospatial big data comes at a time when commercial satellite operators are poised to turn the data spigot wide open. Over the next 18 months, companies dealing in satellite imagery plan to place several dozen new satellites in orbit. By the middle of next year, many of those same companies expect to achieve daily “refresh rates”—new

DigitalGlobe satellite imagery, clockwise from top left: Antananarivo, Madagascar; West Odessa, Texas; Kimberley Coast, Australia; Nairobi; Table Rock, Wyo.; Longyearbyen, Norway

“THIS ISN’T THE COMPANY THAT APPLE WAS.” —Co-founder Steve Wozniak on the Apple Watch

r eddit

April 1, 2016





With algorithms and satellite imagery, geospatial data companies can track activity by identifying surface material, whether individual trees in a forest (left) or aircraft on the tarmac.

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satellite images into meaningful insights, Facebook engineers had to teach their image-recognition engines what to look for—in this case, man-made structures and other infrastructure indicative of human activity. Then they set the software to work on roughly 14.6 billion DigitalGlobe images, documenting the location of every building across some 21.6 million square kilometers of the earth’s surface. Companies have long used satellite image data to understand global economic trends—counting cars in Walmart parking lots, for example. But the computer vision and machine learning tools necessary to automate the process are only now beginning to mature. “We could not have done this five years ago,” says Pavel Machalek, co-founder and CEO of Spaceknow, one of several Silicon Valley data

IT workers afraid that artificial intelligence will replace their jobs eva ns data cor p.

April 1, 2016

analytics firms working with commercial satellite data. The convergence of computing power, machine learning, and satellite imagery is “a perfect storm that’s just beginning to peak,” he adds, allowing geospatial data companies to answer more questions than before. Spaceknow, for instance, uses satellite imagery to monitor changes at 6,000 industrial facilities in China. The company’s China Satellite Manufacturing Index serves as an alternative to notoriously inaccurate Chinese government data. Orbital Insight, another Silicon Valley geospatial data company, tracks national and global trends as well as more esoteric indicators, such as where all the world’s surface water is at any given time, which holds significant interest for scientists and the global insurance industry.


Descartes Labs, of Los Alamos, N.M., uses satellite data to predict the yield of U.S. corn harvests, often more accurately than the Department of Agriculture. And where logging companies previously used samples to estimate the number of trees in an area of forest, DigitalGlobe taps its software to count trees, one by one, across millions of acres of forest. The leap from “estimate” to “accurate” carries big bottom-line implications for industries worth hundreds of billions of dollars. And geospatial data analytics companies are only beginning to wrap their heads around the possibilities, says Luke Barrington, DigitalGlobe’s senior director of platform products. “The data are out of our basement and into the cloud,” he says. “Now comes the fun stuff.”

Manufacturing execs who believe their supply chain will not be affected by tech this year gt nexus/yougov

courtesy of digita lglobe (2)

imagery of the same parts of the planet—at least once every 24 hours. Humans will soon be able to see huge swaths of the planet change daily. With the effort, Facebook joins a growing cast of Silicon Valley companies scrambling to perfect “machine learning”—a newly popular form of artificial intelligence—that could unlock value in petabytes of satellite imagery. “There’s a lot of location data out there, but there hasn’t been a good way to use it to answer questions,” says Kevin Lausten, director of geospatial big data at DigitalGlobe. “If you can start to correlate all this information, you can uncover business opportunities.” Discovering correlations within reams of visual data requires technology that can both see and comprehend. To turn DigitalGlobe’s raw



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APRIL 1, 2016


Burgers, Fries, and good buys Many investors think restaurant chains will keep growing even if the economy falters. But not every stock on the menu is an equally good deal. By Chris Taylor

ac-bn photos—gett y im ages


N THEORY, demand is evergreen in the restaurant business: We all have to eat. But during the past year many restaurant stocks have taken the kind of plunge that makes fainthearted investors lose their lunch. Worries about China’s slowdown have buffeted Yum Brands—parent of KFC and Pizza Hut—which plans to split off its China business to localize the contagion. Chipotle Mexican Grill has grappled with bad publicity from multiple E. coli and norovirus outbreaks, which have helped lop 33% off its stock price. And Shake Shack’s shares have fallen back to earth, plummeting below $35 from over $90, as investors realized that the small burger chain’s growth couldn’t justify its Mars-orbit valuations.

April 1, 2016





Throw in an uncertain economic outlook and industrywide pressures to increase the pay of fastfood workers, and restaurants have looked like an increasingly unappetizing stew to investors—making their stocks among the biggest losers in this year’s market dip. Nicole Miller, managing director and senior restaurant analyst at Piper Jaffray, says that even after a recent rally, the 25 names she covers trade at an average of 10 times Ebitda (earnings before interest, taxes, depreciation, and amortization). Over the past few years they had floated between 12 and 15 times Ebitda. To some investors, those falling valuations signal an overreaction—one that, Miller says, has made many stocks “fairly attractive and very investable.” The bulls believe that American consumers will remain healthy and hungry enough to keep restaurant revenues growing—especially since unemployment is below 5% and cheap gas is leaving more cash in their pockets. While cheaper fuel hasn’t translated to more spending in many consumer sectors, restaurants have been an exception. Total sales for 2015 edged upward by 3%, to more than $700 billion, and market research firm NPD Group forecasts that Americans will make 61.8 billion visits to restaurants and food-service outlets in 2016—which would be the highest figure since before



SLOW FOOD Restaurant traffic has taken a long time to recover from its Great Recession lows, but analysts expect steady growth over the next several years. 64 billion

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the Great Recession. Admittedly, those figures don’t represent explosive growth. “It’s still a challenging environment, with fierce battles for market share,” says Bonnie Riggs, NPD’s restaurant industry analyst. “But there are some real winners in the industry.” Among the dominant trends, says Riggs: anything hot and spicy (think sriracha, ghost peppers, and jalapeños); morning meals, such as McDonald’s all-day breakfasts; and healthier menus that break the pizzaand-cola mold. Given the tough competitive landscape, analysts and investors are being selective. Brian Vaccaro, senior res-

April 1, 2016

taurant analyst at Raymond James, says that although many stocks he watches have flirted with “closeyour-eyes-and-buy-it levels,” his favorite stocks are even cheaper than the norm. (They also do business almost exclusively in the U.S.) One of Vaccaro’s top picks: Red Robin Gourmet Burgers. A sit-down eatery along the lines of Applebee’s, with 500 locations, it’s trading at a mere seven times Ebitda, Vaccaro says. But Coloradobased Red Robin has been gaining market share in the past several years, and Vaccaro believes it has plenty of room to grow in areas like to-go orders and alcohol sales—categories where it currently lags behind its competitors. Vaccaro also likes a relatively under-the-radar name, Dallas-based Fiesta Restaurant Group, which operates the chains Pollo Tropical (a Caribbeancuisine purveyor) and Taco Cabana; together they have roughly 400 locations. With its stock trading at $35, not far off its 52-week lows, Vaccaro calls Fiesta “undervalued and underappreciated.” He thinks that increased ad spending and popular new promotions will fuel a rally for the stock. Piper Jaffray’s Miller, meanwhile, favors a more familiar name: Starbucks. “It has great liquidity, solid global growth, and a phenomenal balance sheet,” she says. While known for its core coffee business, its ace in the hole is its rapidly expanding food sales. For the most recent quarter, food revenue was up 20% year over year, the company re-

ports. (Breakfast-sandwich sales, in particular? Up 40%.) Miller expects such growth to continue, making the company a good buy even at its relatively high valuation of 26 times fiscal 2017 earnings. If the idea of betting on one horse makes you antsy, there are funds that let investors play the industry more broadly. There’s only one restaurant-specific ETF, and it just launched in November (with the cheeky ticker symbol BITE). A better-established fund option is Fidelity Select Leisure Portfolio. The fund owns stocks in hotels and other leisure companies, but almost 60% of it is made up of restaurant stocks—top holdings include Starbucks, Yum Brands, and McDonald’s. It boasts a five-year average return of 13.2% and has been rebounding smartly from February lows. Miller says restaurant stocks could be a safe haven even if the U.S. economy proves to be in, or close to, another downturn. Having reviewed past recessions, she believes consumers tend to keep eating out even in challenging times. After all, publicly traded restaurant chains generally offer meals in the affordable-splurge category—we’re not talking about Thomas Keller’s Per Se and its $325-perperson tasting menu here. “In bad times, the group does just fine,” Miller says. “And in good times, it does even better.”


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Chair, ScaleUp Summit; Contributing Writer, FORTUNE


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How toxic are your junk bonds?

T 58


April 1, 2016

After a nerveracking downturn in high-yield debt, investors are rethinking their strategy. By Lauren Silva Laughlin

many mom-and-pop investors have decided the income is worth a few sleepless nights. But bond defaults tend to rise, and prices to fall, when the economy weakens. That dynamic played out over the past year, as investor

illustr ation by m a r k a llen miller

HE AVERAGE high-yield bond currently pays about 8.5% in interest, roughly seven percentage points more than comparable Treasuries. Historically, that spread between junk bonds and Treasuries has been 5.4 points, according to Andrew Susser, portfolio manager at MainStay Investments. The big question for investors is whether today’s unusually big spread represents a great opportunity—or a trap. Junk bonds have high yields for a reason, of course: They’re issued by less creditworthy companies that have to pay lenders more. Junk bond investors weigh that higher income against the risk of a default that could wipe out their investment. With rates so low on safer bonds like Treasuries,

jitters caused Bloomberg’s junk bond index to fall 11.8% from May 2015 to February 2016. While junk bonds have partially rebounded, today’s high yields reflect enduring fears about what’s to come. Still, some pros argue that high-yield bonds are a good buy at today’s prices, even if a downturn looms. The key, says Michael Fredericks, portfolio manager of the BlackRock Multi-Asset Income Fund, is to focus on that investment oxymoron, high-quality junk. During the recent high-yield slide, bonds rated CCC or lower, the bottom of the creditrating barrel, lost 22% of their value, according to Morningstar; BB-rated junk bonds, at the high end of the spectrum, lost only 6%. The good news is that many mutual funds focus on higher-rated junk. If prices do have further to fall, funds like these limit losses. That can position investors to capture decent longer-term gains: The 10-year annualized return of the Bank of America Merrill Lynch U.S. High Yield index, for example, is 6.5%, on par with the S&P 500—and that includes a very rough patch during the 2008–09 financial crisis. Among funds focusing on higher-quality credit, Todd Rosenbluth, director of ETF and mutual fund research at S&P Capital IQ, recommends the iShares iBoxx High Yield ETF and the Janus High Yield Fund, which both hold most of their portfolios in bonds rated B or higher. The pros’ overall advice: Treat junk bonds like stocks—higher-risk, higherreward investments for the long term. Andrew Dierdorf of Fidelity Freedom Funds recommends holding no more than 10% of your portfolio in junk—and as little as 3% in iffy times like these.



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2016 On February 13, in Mumbai, the honorable Prime Minister of India, Narendra Modi, presented the inaugural TIME India Awards to our winners. The awards recognize leadership in Indian manufacturing and encompass three categories: excellence in manufacturing, innovation and entrepreneurship. Starting with a pool of approximately 3,000 manufacturing companies, an extensive evaluation of qualitative and quantitative parameters produced nine finalists across the three categories. The winners were then selected by an international judging panel. TIME worked closely with knowledge partner McKinsey & Company for the TIME India Awards.

Tata Steel

Hero MotoCorp

Yogesh & Rajesh Agrawal, Ajanta Pharma Limited




We would like to congratulate both the winners and finalists of the 2016 TIME India Awards and look forward to an intense competition in 2017.


Norman Pearlstine

Kevin Sneader

Chanda Kochhar

Chief Content Officer, TIME Inc.

Chairman, Asia, McKinsey & Co.

Managing Director & CEO, ICICI Bank

John Rice

Carlos Ghosn

Rana Foroohar

Vice Chairman, General Electric

CEO, Renault & Nissan

Asst Managing Editor, TIME




Shahi Exports Ltd Hindustan Unilever Ltd

Mahindra & Mahindra Ltd Samsung India Electronics Pte Ltd

Anant Vardhan Goenka (CEAT Ltd) Anil Rai Gupta (Havells India Ltd)

N.R. Narayana Murthy Co-Founder, Infosys

©2016 Time Inc. TIME is a trademark of Time Inc. All referenced trademarks are the properties of their respective owners.

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illustration by EDEL RODRIGUEZ



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F O R T U N E . C O M / G R E AT E S T L E A D E R S

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70 BEZOS PRIME As Amazon spreads its hydra-headed

ESPECIALLY STRIKING in our new ranking of the World’s 50 Greatest Leaders is how many of them you may not recognize. In our media-saturated, personality-obsessed global culture, how can that be? Yet it is so, and that’s what makes this group so heartening. It turns out the world is full of people you’ve never heard of who are rallying followers to make life better in ways you never imagined. The professor who led the group that uncovered the Flint, Mich., water crisis; the New Delhi government official risking his career to fight pollution; the Italian mayor welcoming Middle East migrants to his tiny town—improving its economy and brightening their prospects. Who knew? Plenty of other great leaders cited here are rightly famous, and we’ve recognized some in previous editions of the list. This year there are even a few three-peats, including Amazon CEO Jeff Bezos—our new No. 1 (see the fascinating feature on page 70)—Apple chief Tim Cook, and Pope Francis. Anyone who has been ranked previously must requalify each year with new achievements. As always, we cast a wide net, seeking outstanding leaders in all sectors of society around the world. It isn’t enough to be accomplished, brilliant, or admirable. We recognize those who are inspiring others to act, to follow them on a worthy quest, and who have shown staying power. No mere flashes in the pan, and thus none of the U.S. presidential aspirants, make our list. And no, we didn’t select Donald Trump, the phenomenon of the moment (for more on that, see our Editor’s Desk on page 6); many candidates over the decades have ignited flames that flared brightly and then went out if the candidate lost the nomination or the election; others have proved to be little more than demagogues. Simply applying for the world’s top leadership job, as Trump and his rivals are doing now, does not in itself make one a great leader. Nor, as you’ll see, does having that job necessarily put you on our list. The leaders you’ll meet here, known and new, will lift your mood and upgrade your assessment of the world’s future. Some may inspire you to join their followers. And those unheard-ofs, so seemingly ordinary, may even prompt you to rethink your own potential as an inspiring leader. —Geoff Colvin

80 THE LIST Angela Merkel and Stephen Curry. Ruth


offerings in new directions, its founder is also evolving. In a rare interview, Jeff Bezos talks about becoming a “leader of leaders” and about taking on the mantle of civic leadership at the Washington Post.

Bader Ginsburg and John Oliver. Paul Ryan and an Australian marathoner. What do they have in common? They’re playing a leading role in making the world a better place and inspiring others to do the same.

The gregarious U2 front man could easily be mistaken for a dilettante celebrity—if it weren’t for the results he delivers. How Bono’s consensus building has helped turn One into one of the world’s most effective forces for poverty alleviation.





CONNECTED corridor meets

Michigan is creating the country’s first “smart highway.” The road to tomorrow. When it comes to connected vehicles, it starts in Michigan. Encompassing over 120 miles of roadway, Michigan’s “Smart Corridor” initiative uses V2X communications equipment to create safer roadways by helping drivers avoid road congestion and hazards. And Michigan’s public/ private cyber partnerships are working to safeguard these smart systems. When fully operational, the corridor will highlight Michigan’s leadership in transportation advancements, supported by 330 R&D companies and the nation’s highest concentration of engineers. If you’re looking for what’s next in automotive, look no further than Pure Michigan.


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JeďŹ&#x20AC; Bezos, photographed at Amazon headquarters in Seattle on March 11



EZOS PRIME Amazonâ&#x20AC;&#x2122;s CEO has driven his company to all-consuming growth (and even, believe it or not, proďŹ ts). Today, though, as he deepens his involvement in his media and space ventures, Bezos is becoming a power beyond Amazon. It has forced him to become an even better leader.

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Reporter Jason Rezaian (left) and Washington Post owner Jeff Bezos aboard a private aircraft before it took off for the U.S. on Jan. 22


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I. When Washington Post correspondent Jason Rezaian was freed from an Iranian prison in January after having been held for 18 months on vague charges of espionage, he traveled on a Swiss military aircraft to a U.S. base in Germany. A short time later the Post’s proprietor, Jeff Bezos, showed up to bring Rezaian home.  “It’s an inescapable part of the mission of the Post to send some people into hostile environments,” reflects Bezos of Rezaian, who was detained while reporting in Iran. “And what happened to Jason and his wife, Yegi, is completely unfair, unjust—outrageous. I considered it a privilege to be able to go pick him up. I had dinner with them at the Army base the night that I got there, and then he was getting released after his debriefing the next day, and I asked him, ‘Where do you want to go? I’ll take

you wherever you want.’ And he said, ‘How about Key West?’ I was like, ‘Okay!’ And that’s what I did. I dropped him off in Key West. He and Yegi had only been married for just over a year before he got imprisoned. It was almost like a second honeymoon.” A jubilant photo of reporter and owner inside the latter’s jet quickly made the rounds. Asked if he meant to make a statement by personally retrieving his employee, Bezos replies, “I did it just for Jason. My motivation is super simple. But I would be delighted if people take from it the idea that we’ll never abandon anybody.” It’s an unexpectedly sunny mid-March morning in Seattle, and Bezos’s disposition is even sunnier. Who can blame him? Amazon’s market value is $260 billion, with Bezos’s stake worth $46 billion. Bigness hasn’t sapped its growth: Sales jumped 20%, to $107 billion, last year, and Amazon surprised investors with operating profits of $2.2 billion, a 12-fold increase from 2014. The Post, a declining icon before Bezos bought it for $250 million in 2013, is bubbling with new ideas. Even Blue Origin, the secretive rocket-ship company Bezos funds out of his own pocket, is enjoying a moment of prominence, having promised to blast off with space tourists in a few years. To say all this leaves Bezos energized would be an understatement. Dressed in jeans and a checkered shirt, sleeves rolled up to the elbows, the notoriously intense CEO is the picture of contentment. He’s deploying his trademark cackle—the auditory equivalent of Steve Jobs’ signature black turtleneck— liberally. Says Bezos: “I dance into the office every morning.” He’s got every reason to cha-cha. More has gone right for Bezos lately than perhaps at any other time during his two-decade run in the public eye. His company is expanding internationally and spreading its hydra-headed product and service offerings in unexpected new directions. Bezos, too, is evolving. Always a fierce competitor and stern taskmaster, he has begun to show another side. With the Post, he’s taken a seat at the civic-leadership table. And with his various projects Bezos is also becoming known as a visionary on topics beyond dreaming

up new ways to gut the profit margins of Amazon’s many foes. Bezos is preternaturally consistent. He still preaches customer focus and long-term thinking. Yet of necessity, as Amazon has become massive—and as he has indulged his eclectic and time-consuming pursuits—he has become the sort of leader who empowers others. “He was at the center of everything at the beginning. The leadership was Jeff Bezos,” says Patty Stonesifer, the former Microsoft executive and Bill & Melinda Gates Foundation CEO who has been on Amazon’s board for 19 years. “Today it’s not a hub-and-spoke connecting to him. He has become a great leader of leaders.” Indeed, his evolution portends dramatic repercussions far and wide: The possibilities of a less tethered Jeff Bezos are equal parts exciting (imagine what he’ll do) and terrifying (pity whom he’ll crush).

Post-ing Up: Traffic Soars Under Bezos


but editors still cost money.) Then there’s the Post’s new “talent network,” a highly automated web creation that connects the publication to 800 freelance journalists in the U.S. who can be assigned articles in seconds. Baron compares the network to tech-world innovations like Amazon’s Mechanical Turk, TaskRabbit, and Uber. “We’re not in a position where we can reconstruct an old model of bureaus all over the country,” he says, “and it’s not clear that that’s the most efficient and effective way to go about our work.” It’s unnerving to hear the current “it” editor of American journalism waxing eloquent about outdoing the Huffington Post, pooh-poohing the need for far-flung staff correspondents, and describing how the Post employs the work of other sites. Is he really okay with all this newfangled, journalistically questionable fare? Says Baron: “I have no interest in dying gracefully.” For his part, Bezos professes his belief in the Post’s democracysustaining mission—if not its potential to increase his wealth. “I would not have bought the Washington Post if it had been a financially upside-down salty-snack-food company,” he says. Bezos describes being 10 years old, sprawled on the floor of his grandfather’s house, watching the Watergate hearings. The Post, of course, achieved its maximum renown covering that political scandal. “We need institutions that have the resources and the training and the skill, expertise, to find things,” Bezos says. “It’s pretty important who we elect as President, all those things, and we need to examine those people, try to understand them better.” (Bezos emphasizes he’s not looking to buy any other publications, though he is regularly solicited.) Former Post owner Don Graham, whom he had known for 15 years, approached him through an intermediary and said Bezos could give the publication financial security and the benefit of his Internet experience. “This is the first company I’ve ever been involved with on a large scale that I didn’t build from scratch,” says Bezos. “I did no due diligence, and I did not negotiate with Don. I just accepted the num-



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Editor Marty Baron is discussing how the Washington Post has changed since Bezos became his boss. It’s a blustery February afternoon in Washington, D.C., days before Baron will fly to Los Angeles to attend the Academy Awards. Spotlight, the film about a team of truth-and-justice-seeking journalists at the Boston Globe, where he was then the editor, will win the Oscar for best picture. Baron, by the way, is exactly as Liev Schreiber portrayed him in Spotlight: a dour and serious—yet witty—newsman. Baron sits at a small table in his not particularly grand office in the Post’s new downtown Washington headquarters, which is more lobbyist chic than hot-type-in-the-basement gritty. He explains that Bezos’s chief editorial contribution has been to “push us into the recognition that living in the world of the Internet is different from living in a print world.” Annoyed that “aggregator” sites were getting more online traffic by summarizing Post articles than the Post received for the original articles, for example, the Post has become an adept aggregator itself, “layering on top,” in Baron’s words, its own reporting. Bezos approved funding for a Huffington Post–like site, PostEverything, for unpaid experts to publish their opinions. (Writers may be free,

Since Bezos bought the Washington Post and it began launching a series of digital initiatives, the number of visitors to the news site has taken off.

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“Today it’s not a hub-and-spoke connecting to [Bezos]. He has become a great leader of leaders.”

ber he proposed.” (Graham, who has been publicly mum on the Post since selling it, declined to be interviewed.) By two measures—web traffic growth and volume of new ideas—the Post is thriving under Bezos. (Bezos, not Amazon, owns the operation. The Post releases no financial data, but it’s a safe bet that it’s losing money, given the many investments it’s making.) Monthly web visitors have skyrocketed from 30.5 million in October 2013 to 73.4 million in February this year, the result of vigorous product development. Bezos has no operational role at the Post, but he does keep close tabs. He meets by phone every other week with the news organization’s top managers, including Baron and Post publisher Fred Ryan, former president of Allbritton Communications, whom Bezos recruited to replace Graham’s niece, Katharine Weymouth. Twice a year the team goes to Seattle for an afternoon of meetings with Bezos, followed by dinner. When he bought the Post, there was speculation that Bezos wanted to control the editorial product. Bezos says he has no such interest, and Baron confirms Bezos doesn’t suggest coverage. However, the owner does throw his weight around on wonky issues like web-page load time and ease of subscription sign-ups, both examples of what Bezos likes to call matters of “customer obsession” that resonate with his Amazon experience. Shailesh Prakash, the Post’s chief product and technology officer, says that in his sphere Bezos is downright “pushy,” which he means as a compliment. For example, Bezos encouraged Prakash’s team to develop Arc, a collection of publishing tools, even though off-the-shelf products were available. Amazon, he told Prakash, could have used IBM software when it started out. Instead it built its own, a business that led to Amazon Web Services (AWS), a runaway financial success. “He’s involved. Very involved,” says Prakash, a former digital executive at Sears who joined the Post before Bezos’s purchase. “My engineers and I enjoy that a lot. I suspect Jeff enjoys that too.” Sometimes Bezos’s creativity gets the better of him. Prakash says the owner suggested a gamelike feature that would allow a reader

Amazon Rockets Higher The company’s revenues have consistently ascended, though its stock price has faced turbulence and profits have struggled to lift off.










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who didn’t enjoy an article to pay to remove its vowels. He called it “disemvoweling,” and the concept was to allow another reader to pay to restore the missing letters. The idea didn’t go far, Prakash says, noting that “Marty wasn’t very keen.” Bezos, an unrepentant believer in the power of brainstorming, says, “Working together with other smart people in front of a whiteboard, we can come up with a lot of very bad ideas.” Post people seem to value most that Bezos provides them air cover while they

Blue Origin’s New Shepard rocket, which flew to space and returned to the same launchpad




Monthly page views more than tripled, to 890 million, since Bezos bought the company in 2013. The storied publication has launched a variety of digital products, including an outside contributor section to rival the Huffington Post, and an internal web-traffic optimization tool called Bandito.

Based in an old Boeing plant in Kent, Wash., it has developed a spacecraft, the New Shepard, which launched into suborbital space and returned to earth. Blue Origin plans to begin flying people to the edge of space by 2017. Bezos intends to be in an early wave of passengers, after the company’s test engineers.

The Amazon CEO’s investment arm has staked a variety of startups, including public companies such as Workday, Twitter, and Juno Therapeutics; private “unicorns” like Airbnb, Uber, and Nextdoor; and smaller companies in diverse fields, such as Vessel (entertainment), Everfi (education), and Glassybaby (collectibles).

III. When you walk through the unmarked doors of the offices of Blue Origin in an industrial area near the Seattle-Tacoma International Airport, you quickly realize you have entered space-nerd heaven. A 30-foot-tall globe of the earth spins inside the entryway. Up a flight of stairs to the lobby is a combination first-rate space museum and model hobbyist’s paradise. A canopy over a central fireplace is the base of a Jules Verne–inspired rocket ship, the flames beneath it throwing off real heat. Nearby, a replica of the U.S.S. Enterprise, of original Star Trek fame, stands guard over paraphernalia recovered from actual space missions, including a fuel-flow control valve from an Apollo lunar control descent engine. All these artifacts come from the personal collection of Bezos, a science-fiction buff since childhood. Indeed, everything in the vast building belongs to him. That includes the reusable spacecraft, the New Shepard, that Blue Origin is developing, and its soon-to-be-tested rocket engine, the BE-4. Bezos himself intends to be onboard in several years,

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fiddle with ways to survive the transition from print to digital. Hiring has ramped up significantly under Bezos, providing more resources for serious journalism too. Ryan, the publisher, credits Bezos with demanding risk taking—without fear that failure will be punished. “That provides a sense of invigoration, particularly when other publications are in this mode of ‘If this doesn’t work, there’ll be hell to pay next quarter.’ ” So long as Bezos is enjoying himself, in other words, there is no nextquarter deadline for the Post anymore, just more opportunities to reinvent journalism, preferably in a way that eventually makes money.

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Some CEOs golf in their spare time. Bezos spends his extra hours on:

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“Nobody gets into the space business because they’ve done an exhaustive analysis” and conclude it’s “the one with the least risk and the highest return on capital.”

when Blue Origin is ready to fly humans. Bezos quietly started Blue Origin 16 years ago as a research project and has been mostly mum about it until now. Rob Meyerson, a soft-spoken Midwesterner and former NASA aerospace engineer who is its president, says the stealthy profile largely has been an effort to avoid hyping unproven technology. Meyerson, who worked at a private Seattle-area rocket company called Kistler Aerospace, which went belly up, joined Blue Origin in 2003 when it had about 10 employees. At the time, Bezos had charged his researchers with finding an alternative to the polluting and earsplitting blastoff methods that space programs have used since the 1960s. The research failed, and Bezos changed his mind. “Jeff realized we should invest in liquid propulsion so we could fly a lot,” says Meyerson. “All of this is tied to his original vision of having millions of people living in space.” After years of fits and starts, Blue Origin is finally ready to go airborne. It has successfully sent an automated spacecraft into suborbital space—about 100 kilometers above earth, known as the Kármán line, a 10-minute trip from start to finish—and landed it safely on earth. The company won’t say when, but it plans shortly to begin taking reservations for passengers. It intends to develop a rocket to fly into earth’s orbit, a feat Elon Musk’s SpaceX has already achieved, which will allow it to carry humans and satellites. “Eventually,” says Meyerson, “we want to sell these things to customers. We think we’ll start flying passengers in 2017. These will be test engineers. Then we’ll sell tickets. I imagine Jeff and I will fly in the 2018-ish time frame.” As with the Washington Post, Bezos is regularly engaged with Blue Origin, though in a nonoperational role. Meyerson says Bezos attends a daylong monthly operational review that often includes presentations by outside experts. He also visits for weekly fourhour updates on the progress of its orbital launch vehicle and New Shepard spacecraft. Meyerson says he initially resisted writing the famous six-page “narratives” Bezos requests before meetings, where PowerPoint is banned. Bezos kept asking, though, and

Meyerson relented. Now, he says, he’s a “complete convert.” Bezos won’t say how much money he has sunk into Blue Origin. Reports several years ago put the figure at $500 million, and the company’s spending velocity has only increased. It has 600 employees on the way to 800, with launch facilities in Texas and soon at Cape Canaveral, Fla. “Nobody gets into the space business because they’ve done an exhaustive analysis of all the industries they might invest in and they find that the one with the least risk and the highest returns on capital is the space business,” says Bezos. With his fortune, he can fund rockets for quite a while to come. Indeed, were Bezos to keep blowing through $500 million a year on Blue Origin, he would have to close the place … in 90 years.

IV. In Seattle, I visit the new Amazon Books prototype store in a mall near the University of Washington. Located next to a Banana Republic and across from a Tommy Bahama shop, the store’s very existence is ironic for a company considered responsible for the near extinction of chain bookstores. Once there was a Barnes & Noble in this mall, before it got Amazon-ed. As far as concept stores go, Amazon Books is clever. All but the middle is devoted to books, stacked 10 or so deep; all face out. (Other booksellers charge publishers for face-out placement; Amazon does it on the assumption that customers prefer it.) Placards beneath the books contain customer reviews from, curated by employees. The center of the store is a showroom for Amazon’s burgeoning device business—including Echo personal assistants and Kindles of various sizes—as well as a flat-screen monitor highlighting Amazon’s TV and film offerings. The store’s capabilities are limited. It doesn’t offer store pickup or returns for purchases, for example. Other ideas demonstrate the promise of offline/online retail. For instance, if you use a credit card associated with your Amazon account, you’ll promptly receive a receipt by email. All in-store prices match those on Amazon’s website.


At Amazon’s headquarters an hour later I tell Bezos where I’ve been and that I bought a book, Coraline, by Neil Gaiman, for my daughter. He thanks me for my business, emitting one of his uproarious laughs, and I tell him I don’t think it’s going to help much: The paperback cost $3.94 plus tax. He bursts out laughing again. Every little bit counts, of course, and Amazon is adding bits across its vast empire at a furious pace. Its Amazon Web Services business, with $7.8 billion in sales in 2015, has grown so ubiquitous that it now effectively exacts a tax, as venture capitalist Chamath Palihapitiya has called it, on every startup to run its business. Every day seems to bring another experiment. Amazon’s efforts to compete against Apple’s iPhone failed miserably. But Amazon’s Echo personal assistant devices running on its Alexa natural-language engine have won rave reviews for superior performance compared with Apple’s Siri. Amazon is cranking up an ambitious same-day delivery program, becoming a major force in TV and movies, and has made moves to operate its own air and shipping transportation fleets. It’s all too much for Bezos to micromanage, and he acknowledges picking his spots. His latest passion is for higher-end fashion, an area Amazon has been upgrading in recent years; Bezos says he is focused on

Amazon’s plans for its own private label. “I think there’s so much opportunity for invention there,” he says. “It’s very hard to do online. It’s fragmented offline. People value a curatorial approach.” This, he says, is a significant departure for Amazon. “We didn’t curate a selection of books.” As for Bezos’s other areas of focus at Amazon, he says he’s spending time on “certain elements of AWS, but out a few years,” as well as on Alexa and the company’s fulfillment centers. As for specifics, “I can’t really share any because it’s too much of a roadmap kind of issue.” One reason Bezos can concentrate narrowly at Amazon is the length of tenure of his top lieutenants. Jeff Wilke, for example, joined Amazon in 1999, and today he runs Amazon’s consumer business, which he calls “Amazon Classic.” He says Amazon’s annual planning process—and the detailed narratives its managers prepare for them—allows Bezos to closely “audit” the company’s efforts. Otherwise, says Wilke, “I would say his style has gone from being more prescriptive to teaching and refining.” Jeff Blackburn, an 18-year Amazon veteran who runs the company’s M&A activities and content businesses, describes Bezos as consistent in his selection process. “He still works 65 hours a week. He’s still connected to the office and doesn’t travel


“I would say [Bezos’s] style has gone from being more prescriptive to teaching and refining.”

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Inside Amazon’s first bookstore, in a Seattle mall that used to house a Barnes & Noble

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“The article doesn’t depict the Amazon I know,” Bezos said of a New York Times investigation that portrayed it as a miserable place to work.

We need to talk. I think it’s time we go our separate ways.

very much. He dives in on the same issues now that he did many years ago.” One thing that has changed at Amazon is the level of scrutiny it endures. Brad Stone’s 2013 book, The Everything Store, lauded Amazon’s successes while portraying its treatment of partners and suppliers as shabby. A 2015 exposé by the New York Times portrayed life at Amazon as only marginally more pleasant than in a Soviet gulag. The severe depiction cascaded through the media, and Bezos told employees that “the article doesn’t describe the Amazon I know.” Asked how the criticism has affected him and Amazon, Bezos deflects the question with a politician’s ease. “A company of Amazon’s size needs to be scrutinized,” he says. “It’s healthy. And it’s a great honor really to have a company that has grown into something worthy of such scrutiny.” Amazon had long been known as a grueling place to work, but the Times article struck a nerve. Amazon fired back by criticizing the paper’s journalism in a post on

Medium by its senior vice president for communications, Jay Carney, a former spokesman for President Obama (and former writer for Time, Fortune’s sister publication). The controversy cooled, and Amazon says it hasn’t affected hiring. To this day, Bezos insists Amazon’s intense culture is a strength, not a weakness. A company spokesperson notes that Amazon has implemented a few HR modifications—such as an improved parental-leave program—but then hastens to add that the changes were in the works before the Times article. In the end, the consensus is that Amazon’s culture is every bit as ferocious and demanding as it ever was. Did you really expect Bezos to abandon the formula that got him here?

V. Bezos is now 52. (“A full deck of cards,” he blurts out, laughing loudly at his own joke. “Next year I’ll have a joker.”) He is both at the height of his powers and willing to entertain thoughts of becoming a senior statesman.

I want to change and adapt. I want my business to go places.

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Places farther than three feet away.

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was strictly noncommercial. Amazon wasn’t trying directly to sell anyone anything. Says Bezos, ahead of the event: “I’ll be satisfied if every participant who comes walks away having made a couple of new friends, having had some fun, and maybe being inspired by something amazing.” The billionaire’s literary interests have always been eclectic, often unpredictably so. When I interviewed him in 2012 he had just finished reading a science-fiction book, The Hydrogen Sonata, by Iain Banks. Now he’s reading Jonathan Franzen’s new novel, Purity, which he says, “three different people recommended to me.” He has also just completed the first four chapters of an untitled novel by his wife, MacKenzie, which he describes in great detail but only on the condition that I not write about it without his receiving her permission—which she subsequently withholds. “I’ve been happily married for 23 years, and I’d like to keep it that way,” he says. There are limits, after all, even to the powers of Jeff Bezos.

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Asked if he has sought out role models for this phase of his career, he broadens the question. “I have been blessed my whole life with great role models.” A few he names include his parents, as well as J.P. Morgan Chase’s Jamie Dimon (“I ask Jamie questions. I think he has a really good outlook on life and is very inspiring”), and Warren Buffett. “If I ever have a different opinion than Warren Buffett, my regard for him is so high, I always assume I’m missing something.” Bezos is also embracing the role of thought leader. In late March, Amazon hosted a most unusual conference in Palm Springs. For the event, dubbed MARS, for “machine learning, home automation, robotics, and space exploration,” Bezos and some top deputies curated a group of thought-leader attendees and “scientists, professors, entrepreneurs, hobbyists, and imagineers” in these fields to give talks and conduct demonstrations. Each of the areas have direct relevance to Amazon or Blue Origin, but the company stressed to attendees that the conference

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The List


WILLIAM J. ANTHOLIS Miller Center SHEILA BAIR Washington College (Md.) DOMINIC BARTON McKinsey ROBERT BIES Georgetown McDonough School of Business JEAN CASE Case Foundation MICHELLE CLARKE MAC JOHN DUTTON World Economic Forum JEFFREY GARTEN Yale School of Management RICHARD HAASS Council on Foreign Relations KATIE KERR HOLCOMB B Labs Y.G. LEE Columbia School of Social Work


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MOISÉS NAÍM Carnegie Endowment for International Peace TOMOO OKUBO Unicef PRAGATI PASCALE United Nations JOEY REIMAN BrightHouse CARTER ROBERTS World Wildlife Fund JUDITH RODIN Rockefeller Foundation DOV SEIDMAN LRN PAUL VOLCKER Former chairman, Federal Reserve MALAVIKA VYAWAHARE Journalist RICK WARTZMAN Drucker Institute DAVID WESSEL Brookings Institution

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ANGELA MERKEL has dominated Europe’s politics for a decade

now. She is the only Continental leader whose term in office predates the 2008 financial crisis, a winner of three general elections who has also seen off countless intraparty rivals. But last year, after a decade of hard-nosed and decidedly cautious pragmatism, she became a conviction politician: She put charity and compassion ahead of realpolitik by welcoming more than 1 million hard-pressed migrants and refugees to Germany. It was an action that sealed her legacy as a great leader, but it may be the beginning of the end of her power. Merkel is facing a virulent antiforeigner backlash at home and a “Schengen crisis” in the neighborhood as other European Union members hastily re-erect the national borders that were lowered by earlier, landmark union agreements. The EU in March offered billions of euros to Turkey to stop the flow of migrants. Nor is Merkel’s other great achievement—saving the eurozone from its debt crisis—truly secure. Her example is inspiring, but her star is waning: How far and how fast will it fall?


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RITA MCGRATH Columbia Business School

Myanmar is about to complete a onceunthinkable transition to democracy after more than 50 years of military dictatorship. Aung San Suu Kyi, 70, won’t be the country’s new leader—at least not officially. But hers was the steady trickle of resistance that wore down the stone of Myanmar’s despotism over almost 30 years of opposition. Suu Kyi, the daughter of one of the founding heroes of the country’s post–World War II independence movement, returned to Myanmar from exile in 1988 to oppose the junta that had taken power in the early 1960s. She co-founded the National League for Democracy and steadfastly renounced violence, even as the military subjected her to house arrest for nearly 20 years. Her personal sacrifice gradually rallied global opinion around her cause, the more so after she won a Nobel Peace Prize in 1991. Worn down by isolation and sanctions, the regime eventually agreed to allow free elections, which the NLD won in a landslide last November. While rules imposed by the junta kept her from personally running for office, it was Suu Kyi’s nearly mythical reputation that rallied voters to her party. And she has made it clear that she will wield decisive behind-the-scenes authority (backing titular President Htin Kyaw, a friend and former aide) in the next, risky phase of the nation’s history. Myanmar’s challenges include a struggling economy and violent conflict among its ethnic groups. But Suu Kyi has already demonstrated that her authenticity as a leader—her willingness to live the right message at any cost— can be a tremendous force for good.






Pope Francis has the distinction of being one of three leaders—alongside Amazon CEO Jeff Bezos and Apple CEO Tim Cook—who have made Fortune’s list every year of its existence. This past year has been the year of Pope Francis the diplomat. The first Latin American pope played a key role in brokering a deal between the U.S. and Cuba, writing letters to both presidents Barack Obama and Raúl Castro encouraging the two nations to find common ground. For the first time ever, Francis traveled to the U.S., to deliver his message of social justice in the world’s most powerful country. Francis dug particularly sharply into what he called the “dung of the devil,” criticizing “the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose.” And his Laudato si’ encyclical calling for “swift and unified global action” in defense of the environment undoubtedly gave momentum to the effort that led to a global climate change pact in Paris in December. The pope’s unapologetic advocacy on behalf of the poor and the environment has only boosted his popularity— when he launched an Instagram account in March, he gained 1 million followers in under 24 hours. But the tension between the Catholic Church’s culturally conservative adherents and its more socially progressive followers remains among Francis’s trickiest managerial challenges. He continues to thread a tight needle, making the church more welcoming to LGBT worshippers and divorced Catholics while assuring traditionalists that he isn’t changing doctrine.

Tim Cook and other Silicon Valley luminaries have been quietly playing tug-of-war with Washington over digital privacy for years—at least since Edward Snowden leaked disclosures about government surveillance back in 2013. But this year, when a court ordered Apple to create a backdoor for an iPhone used by a suspect in the terrorist shooting in San Bernardino, Calif., Cook had a resounding answer: Back off. In a letter to Apple customers, Cook called the FBI’s demands “chilling” and “an overreach.” While top tech execs have lined up behind Cook, it’s Apple that is facing the FBI in the showdown. Cook has put Apple’s popularity at stake in defense of principle: In a Pew Research Center survey, a majority (51% to 38%) said that Apple should comply with the FBI’s request. But court filings by the Justice Department suggest that it may blink before Cook does.


“Great leaders accomplish big things by making themselves smaller in the moment and giving others space to thrive.”


HE CAN BOAST A BEST-SONG OSCAR, 10 Grammys, and at least 6 million albums sold. But Legend, 37, also embraces the grunt work of philanthropy— serving on boards, penning editorials, conducting listening tours in prisons and schools—and his advocacy is attracting as much attention as his hits. Last fall the Show Me Campaign, an education-oriented nonprofit Legend founded, launched #FREEAMERICA, a drive to reduce mass incarceration. In a Time op-ed, Legend called on legislatures to “ban the box” requiring job applicants to state whether they have a criminal record—a hurdle that makes it hard for rehabilitated felons to reenter society. The movement took on momentum in November when President Obama banned the box in federal hiring, and it’s one reason the NAACP just gave Legend its President’s Award, a service honor typically given to people decades older.




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If Mother Nature held auditions for a guardian, Figueres, 59, would be first in line. The daughter of a Costa Rican President who led a landmark revolution in 1948, Figueres became the United Nations climatechange chief in 2010, tasked with nothing less than halting the potentially catastrophic effects of global warming. For six years she worked to convince governments that a binding agreement on limiting carbon emissions and slowing fossil fuel-led growth was in the world’s best interest. Figueres’s efforts culminated in December at the Paris climate conference, where 195 countries signed a deal committing them to limit worldwide temperature increases to no more than 2° C above preindustrial levels, a critical if hard-to-attain benchmark. “To bring all countries together on something everyone has been fighting on for decades, and to get them to agree, was brilliant,” says Jean Krasno, a political science lecturer at City College of New York and the author of The United Nations: Confronting the Challenges of a Global Society. Figueres is stepping down in July, and many believe she could become the first woman to be named UN Secretary-General.

It’s either a high compliment to Paul Ryan or an indictment of his party— or both—that whenever Republicans drive into a ditch, their leaders hand the keys to the 46-year-old Wisconsinite. Ryan’s singular status as a wonk with vision and the respect of the GOP’s disparate factions keep them coming back. Last fall Ryan played the reluctant savior amid the chaos following thenSpeaker John Boehner’s ouster by far-right rebels, quitting his beloved Ways and Means Committee to lead the chamber. Now some pooh-bahs want him to reprise the role by agreeing to run for President. This time, Ryan swears he’s staying put.


SHEIKH HASINA PRIME MINISTER / BANGLADESH As the only female leader among the Organization of Islamic Cooperation member states, Hasina has deftly navigated the competing demands of Islamic tradition and women’s rights. She has committed Bangladesh, the nation with the world’s fourth-largest Muslim population, to securing legal protections for women and helping them attain more education, financial freedom, and political power. About 30% of adult women in Bangladesh now have at least a secondary education—and the nation scores better on the World Economic Forum’s Gender Gap Index than any other South Asian country.



TO SAY IT IS UNLIKELY for a Supreme Court Justice to become a cul-

tural icon is an understatement. But that’s exactly what has happened to Justice Ruth Bader Ginsburg. Thanks to a 2015 book that in turn expanded on a law student’s fan site on Tumblr, she is now known on the Internet, on T-shirts, and to young women everywhere as “Notorious RBG.” Deservedly praised for her intellect, skill, resilience, and strong voice on everything from voting to women’s rights, Ginsburg’s leadership was never more on display than in the respect she showed after the passing of her colleague, friend, and ideological opposite, Justice Antonin Scalia, earlier this year. In a political season when one could question our capacity and even desire to find common ground with those having opposing viewpoints, Ginsburg serves as an example for us all in her ability to connect in the service of a mission more significant than one’s self-interest. —Dov Seidman, chief executive of LRN and author of How: Why How We Do Anything Means Everything


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Ruth Bader Ginsburg



Tencent’s WeChat social network has 700 million users and is as ubiquitous in China as Facebook is outside it. That helps make Ma the 10th-richest person in tech (Tencent’s shares rose 20% last year) and someone with a major influence on shaping the habits of China’s growing middle class. Already Tencent’s WeBank is extending loans to Chinese consumers not well served by stateowned banks. Tencent’s dominance has come with concessions: Researchers say WeChat is increasingly monitored by the government. It will remain Ma’s balancing act to keep both users and censors happy.

Moro, a 42-year-old telegenic federal judge, is the main protagonist in Brazil’s real-life edition of The Untouchables. Moro has led the prosecution of a brazen corruption scheme that siphoned $3 billion from Petrobras, the national oil company, to the pockets of politicians and officials. President Dilma Rousseff risks impeachment, and former President Luiz Inácio Lula da Silva’s reputation is in tatters. And more important: The passive coexistence with corruption long endemic in Latin America is becoming a habit of the past. —Moisés Naím, distinguished fellow at the Carnegie Endowment for International Peace


THE DYNASTY WAS OVER. That was the consensus of the pundits after Alabama’s 43–37 loss to Ole Miss in its third game of the season last September. The famed “process” that Crimson Tide coach Nick Saban, 64, had used to win three national titles in football at Bama— while boosting graduation rates—had run its course, and the competition had caught up. Saban challenged his team: “How are you going to respond?” When Alabama defeated Clemson 45–40 for another title on Jan. 11, 2016, he had his answer, and the dynasty— and Saban’s legacy as a leader—remained intact.


BONO LEAD SINGER / U2 CO-FOUNDER / ONE In 1984, Bono was one of almost 40 pop stars who recorded (and in some circles were mocked for) the anti-famine fundraising single “Do They Know It’s Christmas?” Thirty-two years later, he’s still walking the walk. The Irish rock icon now leads One, a data-driven, global organization that influences governments, rallies C-suites, and raises millions of dollars for people living in poverty. His secret: an ability to convince others that they are the true leaders of change, not him. For more on what business can learn from a music legend, read Ellen McGirt’s profile in this issue.

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Nick Saban

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NEITHER WOULD LOOK OUT OF PLACE showing up to the noon run at the local Y, a

—Chris Ballard, a senior writer at Sports Illustrated and a Bay Area native

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At a moment when it seems most urgent, Stevenson has emerged as one of the nation’s most effective crusaders against inequity in the criminal justice system. Stevenson founded the Alabama-based Equal Justice Initiative in 1989. It was his argument that persuaded the Supreme Court to end life-withoutparole sentences for children in 2012, and EJI has freed 115 wrongly condemned prisoners from death row. Last year EJI documented thousands of past lynchings that occurred across the South; the group’s next move, with funding from Google, will be to create civil rights memorial sites across the country.

While the most successful Republican pol builds a following by stirring resentment, Haley is proving that Trumpism isn’t the only way. South Carolina’s Indian-American governor was among the earliest in her party to call out the GOP presidential front-runner, warning against “the siren call of the angriest voices”—in a nationally televised State of the Union response, no less. Last summer, following the massacre of nine African Americans in a Charleston church, Haley engineered the removal of the Confederate flag from state capitol grounds, setting off a movement across the South to pack away the charged symbol.


“Beyond New York City, Lin-Manuel Miranda’s Hamilton is capturing imaginations and challenging assumptions of how art is created, and by and for whom.”




Hamilton, a musical biography of the bastard immigrant who became the first U.S. Treasury secretary, ranks among the most inventive, emotionally gripping theater pieces ever written. But as giddily virtuosic as Miranda’s music and lyrics are, it’s the casting concept that reveals the profundity of his vision. Without comment or apology, black and Hispanic actors (including Miranda, as Hamilton) portray every Founding Father. It’s Miranda’s way of asserting that America’s ideals belong to everyone—and it’s arguably the most optimistic, civic-minded statement any artist is making today.

Not long ago, J.C. Penney looked like a failed department store destined to die. But Marvin Ellison, CEO since August after nine months as president, has engineered a stunning (if still early) turnaround, improving store layouts, fixing e-commerce operations, and chipping away at Penney’s huge debt. Shares are up 75% in 2016 on renewed optimism about the company. And Ellison owes much of his success to his belief in talking regularly to his troops in the field rather than issuing diktats from on high, an approach that has galvanized a workforce still traumatized by Penney’s near collapse.


couple of spindly, amiable, not-quite-tall-but-not-quite-short guys. We look at Steve Kerr and Stephen Curry and want to think, That could be us. Of course, it couldn’t. Kerr has more NBA championship rings than he can fit on his shooting hand. Curry is en route to a second MVP while logging a historic scoring season, obliterating the previous mark for made three-pointers. To spend time around the Warriors as they chase history is to see each lead in his own way. Kerr is selfdeprecating, with a dry wit, making it clear that Golden State’s success is about the team, not him. Behind the scenes, he empowers those around him to make decisions, reinforces the value of work-life balance, and meets problems head on. In Curry, Kerr presides over the rare star who is, as the coach puts it, “humble yet arrogant”—arrogant on the court and humble everywhere else. Curry rarely speaks up, but teammates notice his hours of extra training, his focus on family, and how he conducts himself publicly, forever gracious and accommodating with fan adoration. Strive to win; enjoy the process. This is the combination that fuels the Warriors.

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RESHMA SAUJANI FOUNDER AND CEO / GIRLS WHO CODE In a TED talk in February, which has since accrued more than 800,000 views, Saujani stressed teaching girls to be brave rather than perfect. She’s well-qualified to preach that message: It took the former Wall Street attorney three tries to get into Yale Law School. Girls Who Code, which aims to get more women into computer science, is seeing plenty of early success: By the end of 2016, more than 40,000 girls will have gone through its training and internship programs. This summer, Girls Who Code will dole out $1 million in scholarships (classes are already free, but scholarships pay for transportation and other costs).


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Scott Kelly and Mikhail Kornienko



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Larry Fink built Black-

Rock into the largest investment firm in the world, with $4.6 trillion in assets under management. And two years ago he took it upon himself to redefine the relationship between the Fortune 500 and Wall Street. Fink wrote a letter to the CEOs of nearly every large company in America deploring the corporate culture of short-term thinking and threatening to vote out board members who didn’t hold management accountable. Other large investment firms have followed BlackRock’s lead—and Hillary Clinton adopted a tax proposal, similar to one Fink outlined, that would pressure shareholders to hold their investments longer.

ON JULY 17, 1975, 229 kilometers above the earth, two orbiting

spacecraft floated into a historic embrace. When the hatches between them were opened, Apollo astronaut Thomas Stafford greeted cosmonaut Alexey Leonov of Soyuz 19, as millions of TV viewers watched in awe. That “handshake in space,” as it came to be known, was a breathtaking act of diplomacy in the midst of the Cold War, a symbol that even the globe’s wariest antagonists could find common ground—at least in a place where there was none. Some four decades later, U.S. astronaut Scott Kelly and Russian cosmonaut Mikhail Kornienko have not only reprised that goodwill gesture, but elevated it into an opus of statesmanship. The two men returned to earth on March 2 after working side by side for 340 days in the International Space Station, a journey in which they circled the planet 5,440 times, traveled 144 million miles (nearly the distance from the earth to Mars), and conducted more than 400 scientific experiments—profoundly expanding our understanding of space’s effects on human beings and showing that, when it comes to the final frontier, there is no border between nations.

DAVID MILIBAND CEO / INTERNATIONAL RESCUE COMMITTEE Miliband has his hands full with the Syrian crisis: Since 2014, the IRC has provided aid to more than 1 million refugees. But his bigger ambition, he tells Fortune, is to transform the “humanitarian sector” into a “humanitarian system,” one that helps coordinate the long-term giving of big donors, enables charitable groups to operate more efficiently—and in return, provides donors with more transparency. That would meet an urgent need: With 20 million refugees worldwide and another 40 million people displaced in their home countries, the international aid community could use better ways to collaborate.





The List



“In decrying companies’ short-term mind-set, few voices have been as important or as forceful as Larry Fink’s.”


ANNA MARIA CHÁVEZ CEO / GIRL SCOUTS OF THE USA When Chávez, the first person of color to head the scouts, took the helm in 2011, the 104-yearold institution seemed to be creeping toward anachronism. Not anymore. Chávez has added new badges in fields like financial literacy and STEM education. You can now buy Girl Scout cookies online. And Chávez has teamed with the likes of Sheryl Sandberg (on a campaign to encourage leadership among girls), First Lady Michelle Obama (who recorded a scouts recruitment video), and even Chris Rock, who collected more than $65,000 during the Oscars in donations and sales of Thin Mints and Tagalongs.




In February, President Obama nominated Hayden to lead the Library of Congress. If confirmed, she will be the first woman and the first African American to do so—and fresh leadership for a 216-year-old institution in sore need of a technological upgrade. Hayden knows plenty about sustaining a library as a relevant and inclusive institution. In Baltimore, where she has run the Enoch Pratt Free Library system for 23 years, she has modernized early and often. When violence erupted near one branch last April, Hayden kept it open—a safe, trusted space for community members.

For decades fiscal mismanagement and corruption have made Argentina an economic backwater. But Macri, the new President, has foreigners and Argentines alike expressing optimism about the country again. Macri, the former governor of Buenos Aires, won a very close election last fall against a ruling party dominated by cronies of Argentina’s past leaders. Among his first acts: reintegrating Argentina in the global economy by pledging to repay debts on which it had defaulted. The country “is fast becoming a model to its neighbors,” says Richard Haass, president of the Council on Foreign Relations.

Alicia Garza, Patrisse Cullors, and Opal Tometi CO-FOUNDERS / BLACK LIVES MATTER

MODERN SOCIAL MOVEMENTS often fizzle after their moment in the national news (Occupy Wall Street comes to mind), but Black Lives Matter has steadily gained momentum since its founding in 2013. The Black Lives Matter network has grown to 28 local chapters, all fighting injustices like police brutality and racial profiling. Last year the movement inspired college students to take up the mantle with some successes (the system president and chancellor of the University of Missouri resigned over outcry that they had failed to address campus racism) and pushed presidential candidates to address the country’s systemic racial problems— an issue would-be nominees would have preferred to sidestep.

From left: Cullors, Garza, and Tometi




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cerebral deep dives into social injustices on his HBO show, Last Week Tonight, have created a new form factor in comedy—call it “investi-comedy.” There isn’t a topic he won’t tackle, from the plight of chicken farmers to native advertising to net neutrality. He insists he’s no more than a comedian, but he has effected change: His net-neutrality piece, for example, was credited for a shift in the FCC’s position (and for crashing the agency’s website). His merciless pre–Super Tuesday takedown of Donald Trump, meanwhile, has been viewed more than 22 million times on YouTube.


MARK EDWARDS PROFESSOR / VIRGINIA TECH Edwards, a MacArthur “genius” grant recipient, is one of the nation’s top experts on water contamination—and nowhere has his impact been bigger than in Flint, Mich. In August, Edwards and a team of researchers made the 11-hour bus ride from Virginia to Flint. There, the group acted as scientists, journalists, and advocates, collecting hundreds of water samples, filing Freedom of Information Act requests, and updating the public through a blog. Edwards’s team proved that Flint’s water supply was poisoning its residents—triggering state and federal intervention and a nationwide debate over water safety.







“One doesn’t have to agree with Paul Ryan on everything— and I don’t—to admire his ability to articulate his conservative vision, to exhort Republicans to remember the struggles of those born into poverty.”

Moncef Slaoui has spent his career attacking the under-researched diseases that plague the developing world. He already has a cervicalcancer vaccine and a pneumococcal immunization to his credit, and in 2015 he won European approval for the world’s first malaria vaccine, which could limit the spread of a disease that kills more than half a million people a year. Vaccine development is a passion that’s deeply personal for Slaoui: His brother died from whooping cough, an immunizable disease, while they were growing up in Morocco. On his horizon at GlaxoSmithKline: an Ebola vaccine.

the right is to have a shot at steering American public policy, Arthur Brooks will be one of the architects of its vision. His conservatism stands for something more than tax cuts for the rich and ever-tighter restrictions on abortions. The New York Times’ David Brooks described it as “capitalism for the masses”: It includes a heavy emphasis on social entrepreneurship—leveraging business techniques to solve social problems. Not what you’d expect from a Seattle-born French-horn player. —David Wessel, director of the Hutchins Center at the Brookings Institution

On Feb. 12, 2014, 11-year-old Luke Batty was killed with a cricket bat by his own father, who was then shot and killed by police. The next day, Luke’s mother, Rosie, stood in front of television cameras and calmly said, “Family violence happens to everybody.” Thus began a nationwide road trip that has seen Batty selflessly put domestic violence on the Australian agenda in a country where one in five women has experienced sexual violence after age 15. “She moved forward the issue by a decade or more,” says Jeremy Lasek, whose government organization named Batty the Australian of the Year for 2015.


in every major Chinese city. But until former CCTV reporter Chai Jing released the powerful documentary Under the Dome last year on the causes of gray skies—failed government policies, feckless regulators, corruption—and their effects, including skyrocketing cancer rates, shorter life-spans, and childhood illnesses, China’s middle class had mostly taken it with a shrug. Chai’s 104-minute documentary drew 200 million views online in a week before government censors took it down. It created a groundswell of concern and anger that continues today.






In the Democratic Republic of the Congo, militiamen use sexual violence as a tool of war—at the height of the country’s decades-long conflict, 48 Congolese women every hour were raped. Congolese surgeon and gynecologist Denis Mukwege, who founded a hospital in the epicenter of the violence, has treated tens of thousands of victims— some of them children of rape themselves. Despite censorship by the Congolese government, attacks, and an assassination attempt, Mukwege has continually returned to the operating theater, and he has campaigned fiercely worldwide to bring the military use of sexual violence to an end.

The former French Finance Minister fought to keep the eurozone together in her first term as managing director of the International Monetary Fund, an accomplishment that helped her earn (unopposed) another five-year term. She faces comparable challenges today, among them avoiding a debt crisis in emerging markets, keeping China committed to the path of market reforms, and persuading Congress to honor the reforms the U.S. agreed to in the wake of the 2008 crisis. That may still leave her some time for another cause she favors: boosting female workforce participation in the developing world.







America’s smallest state just tackled one of the country’s biggest fiscal problems. Countless state and local governments struggle with underfinanced pension plans, and Rhode Island’s was one of the worst before 2014. That’s when Gina Raimondo, then state treasurer, engineered an overhaul that slashed cost-of-living increases and pointed the system toward solvency. Publicsector unions fulminated and sued, but voters rewarded Raimondo by electing her governor. In 2015 she negotiated legal settlements that preserved her pension reforms, inspiring hope in cash-strapped statehouses everywhere.

As special adviser on post-2015 development planning to UN Secretary-General Ban Ki-moon, Mohammed had to rally 193 countries to endorse the same objectives for the next 15 years. Acting as the point person for the Sustainable Development Goals, she helped bridge the divide between developing countries and First World nations, and by September all member states signed on to 17 goals related to wiping out poverty and tackling climate change. Now Nigeria’s Environment Minister, Mohammed is trying to make renewables a bigger factor in the oil-producing country’s energy strategy.


If there’s a poster boy for the era of socially active CEOs, it’s—quite easily— Marc Benioff, who has masterfully mobilized his company as a vehicle for his social agenda. He was one of the loudest opponents of Indiana’s antiLGBT “religious freedom” law last year, announcing that his $5.4 billion cloudbased software company would boycott the state altogether. (That law was amended; Benioff is now fighting a similar measure in Georgia.) He has also emerged as a pay-equity pioneer, tackling the stubborn gender pay gap by examining the methodology used to compensate his own 16,000 employees and mandating that women make up 30% of all meeting attendees.

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WHEN GRIEST, a platoon leader, and Haver, an Apache helicopter pilot, enrolled in the Army’s notoriously grueling Ranger School, they were simply soldiers. When they graduated in August— the first women ever to do so—they were icons. What got them through the brutal regimen of runs, marches, and other mental and physical trials? “I was thinking really of future generations of women—that I would like them to have the opportunity,” said Griest. Their accomplishment, astounding in its own right, transformed the debate about women in warfare, proving that women can perform on the battlefield as ably as men. And that undoubtedly buttressed the Pentagon’s December decision to open all combat positions to women—without exceptions.

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41 DOMENICO LUCANO MAYOR / RIACE, ITALY drained life from Riace, a village of 2,000 on the Calabrian coast. When a boatload of Kurdish refugees reached its shores in 1998, Lucano, then a schoolteacher, saw an opportunity. He offered them Riace’s abandoned apartments along with job training. Eighteen years on, Mayor Lucano is hailed for saving the town, whose population now includes migrants from 20-some nations, and rejuvenating its economy. (Riace has hosted more than 6,000 asylum seekers in all.) Though his prorefugee stance has pitted him against the mafia and the state, Lucano’s model is being studied and adopted as Europe’s refugee crisis crests.

The List



Ramos is “the Walter Cronkite of the Latino population— but more than that because he actually advocates for issues that impact the community.”

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Melinda Gates and Susan Desmond-Hellmann


WHEN KEJRIWAL UNVEILED a blueprint to tackle the smog in New Delhi—called the world’s most polluted city by the World Health Organization—many were skeptical. A key component: an “odd-even” pilot project in which vehicles were allowed on the roads only on alternate days. The uplifting result of the pilot this January: Roads were less clogged, hourly particulate air pollution concentrations dropped by 13%, and citizens could breathe deep.

FOR THE PAST 15 YEARS, the Gates Foundation has leveraged its

$44.3 billion endowment to attempt to eradicate diseases like malaria in the developing world. Under new CEO DesmondHellmann, a former Genentech product chief, the foundation could become an even bigger player in global health. Last year the foundation financed a prototype of a plant that converts human feces into drinkable water; meanwhile, a $1.5 billion commitment to vaccination organization Gavi will ensure that an additional 300 million children will be vaccinated by 2020.








much of white America, Ramos became a household name only after Donald Trump kicked him out of a press conference in August. But Ramos, who has cohosted Univision’s flagship Spanish-language news show for almost 30 years, might be the most influential journalist in the U.S. Ramos is part journalist, part advocate, a newsman who hammers candidates on immigration policy even as he urges Hispanic Americans to register to vote. Political analysts have found that Latinos are twice as likely to vote if they frequently watch Spanish-language news, a correlation they dubbed the “Jorge Ramos effect.”

Froman traces his

friendship with President Obama to their days on the Harvard Law Review. That pedigree helped the trade ambassador win the argument within the White House for chasing the 12-nation TransPacific Partnership, the largest regional trade pact in history. Capitol Hill has proved a tougher sell, but Froman’s pitch job helped overcome Democratic resistance last year and kept the package inching forward. Now populist crosswinds from the presidential campaign threaten the deal anew. Froman may need a buzzer beater, in the post-election lameduck session, to salvage his world-bending project.

While some climaterelated threats can seem abstract, water scarcity is visceral and immediate, palpable in the crunch of drought-ravaged crops or the sting of a parched throat. Guli, an Australian corporatelawyer-turned-activist, started Thirst to educate consumers about water conservation, but this year the 45-year-old upped the ante, running 40 marathons across seven deserts on seven continents—in just seven weeks—while collecting conservation pledges online. On March 22, World Water Day, she completed her 1,048mile journey. “Never seen a better example yet of #gobigorgohome,” tweeted a fan in Hong Kong.


For decades emigration


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In 1985, Andy Grove was president of Intel, and he faced a crisis. Intel had created the memory chip industry and had thrived for years. But fast-moving Japanese competitors had commoditized the business, and Intel’s profits were plunging. As Grove recounted in his book Only the Paranoid Survive, he and CEO Gordon Moore had been agonizing over the problem when something hit him. “I turned to Moore and I asked: ‘If we got kicked out and the board brought in a new CEO, what do you think he would do?’ Gordon answered without hesitation, ‘He would get us out of memories.’” Grove’s reply: “‘Why shouldn’t you and I walk out the door, come back, and do it ourselves?’” And that’s what they did, leaving chips behind, shifting to microprocessors, and positioning Intel for decades of growth. Grove was able to divorce himself from the daily struggle and see that, to save the business, he had to give it up. In doing so, he laid the foundation not only for the modern computer industry, but for modern management. The mantra? Don’t protect the past. Don’t let a product define your business. Always disrupt yourself. —Alan Murray



In the 1970s oil generated half of Uruguay’s electricity. Now renewables provide 94.5%, making this South American nation of 3 million a guiding light in how to decarbonize your economy. As national director of energy, Méndez oversaw the transformation, capitalizing on the nation’s blustery weather to build wind farms and tapping hydropower and biomass. “The decisions Uruguay took benefited the climate yet also made economic sense,” says Joe Thwaites, research analyst at the World Resources Institute. Méndez’s next ambitious goal: an 88% cut in carbon emissions by 2017.

Through her website Sarawak Report, Londonbased journalist Brown has become an irritant in the corridors of power in Malaysia. Her exposés on state investment fund 1MDB—publicizing the alleged siphoning of $700 million into the pockets of Prime Minister Najib Razak—have made her a hero and a villain in the country, depending on whom you ask. The government has tried to arrest her for “activities detrimental to Parliamentary democracy” and has banned her website, a move that prompted advocacy group Reporters Without Borders to unblock access and help get her revelations out.


48 Justin Trudeau



BRIGHT SIMONS PRESIDENT, FOUNDER / MPEDIGREE Counterfeit drugs are rife in Africa—one estimate pegs the chances of purchasing one at 30%, and in 2013 more than 120,000 African children died because of poorquality antimalarials. Simons, a 34-year-old entrepreneur from Ghana, offered a boldly simple solution: Africans could check the authenticity of medications by sending mPedigree a text message with the special 12-digit code marked on their drug packet. Now mPedigree has its labels on more than 500 million packets, with clients including giants AstraZeneca and Sanofi. The company is currently active in 12 countries in the developing world.

AS THE POLITICAL systems of the

U.S. and Europe heave with anger and dysfunction, Canada’s new Prime Minister offers an upbeat contrast. Having won election decisively in October, Trudeau has rallied the public behind ambitious plans for climate change— he wants to reduce methane emissions, which trap heat at a far greater rate than CO2—and a pledge to resettle 25,000 Syrian refugees. He is also moving to legalize marijuana. And he’s doing it with a soft-swagger optimism that’s rare in Western democracies right now.

TSHERING TOBGAY PRIME MINISTER / BHUTAN Tshering Tobgay is only the second Prime Minister to govern the Maryland-size country of Bhutan since it held its first democratic election in 2008. He still uses the old monarchy’s Gross National Happiness Index, compiled through surveys of citizens, to measure the country’s progress, but he has also turned to more concrete goals, like harnessing the economic potential of the Himalayan nation’s hydropower. And he’s sustaining the country’s environmental commitment: Bhutan has maintained its unique status as a carbon-negative country, serving as a “sink” for about 4 million tons of CO2 a year.


The List






No. 14 BONO



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Irish rock icon Bono leads a widely acclaimed, data-driven, global organization that influences governments, rallies C-suites, and raises hundreds of millions of dollars for people living in poverty. What’s his secret? An ability to convince others that they are the true leaders of change, not him. Here’s what business can learn from a music legend.

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Bono, photographed near his home outside Dublin in March 2016

p ho t o g r a p h s b y S A M J O N E S

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No. 14 BONO

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“WHY ISN’T EVERYONE PROCLAIMING THIS TO THE HILLS? Isn’t this big news?” Bono, lead singer of the Irish band U2, is working the crowd. It is the fourth night of the Innocence and Experience Tour in New York City’s Madison Square Garden, a multimedia spectacle with two stages, a catwalk, and an untold number of cathedral-high digital screens—a pageant of rock-and-roll theatricality that feels justifiably epic for a band that has sold 175 million records, won 22 Grammys, and notched the highest-grossing world tour in history. But that’s not the crowd Bono is working. As throngs of U2 faithful rush the arena for the July 2015 concert, the band’s 55-year-old front man is at a makeshift meet-and-greet three floors above and a world away. There, in a curtained,

Power Forward In February, President Obama signed into law the Electrify Africa Act, which aims to help 50 million people in subSaharan Africa get electricity for the first time. COUNTRIES WHERE LESS THAN 50% OF THE POPULATION HAS ACCESS TO ELECTRICITY


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pop-up sanctuary, behind rows of chairs and rigging equipment, Bono embraces House minority leader Nancy Pelosi. He claps a fund manager on the shoulder and says warmly, “We are winning the fight against AIDS.” Statistics pour out of his mouth like so much small talk as he welcomes the 30 or so gathered VIPs: The United Nations had just issued a report showing that new HIV infections have fallen by 35%, AIDS-related deaths by 41%, and millions more people than expected are getting lifesaving medication. Bono relates the news as if he is an infectious-disease expert, not a rock star. As it happens, he’s both. Bono finds a potential ally in the crowd. It’s young Barbara Bush, the daughter of former President George W. Bush and granddaughter of the first President Bush, whom Bono wickedly prank-called from U2’s Zoo Tour concert stage in the early 1990s. All is forgiven. “I saw your sister last week, swollen with child,” he says to Barbara Bush, talking about her twin, Jenna

Bush Hager. “Absolutely beautiful she was!” Then he leans in for the drop. “You know, I do want to call your dad,” he says. “I have for about a week.” The world is now on track to eliminate the AIDS epidemic by 2030. Had she heard? “Your father, he was part of this,” Bono says, referring to the creation of Pepfar (President’s Emergency Plan for AIDS Relief ) in 2003, the legislation that has earmarked some $60 billion in the fight against AIDS to date. It remains the largest financial commitment of any country to combat a single infectious disease. It had bipartisan support. Its passage brought global attention to an illness that was on its way to becoming a deadly, uncontrollable pandemic. Says Bono: “I don’t think the American people understand how many lives they’ve saved.” Later he reformulates the message, spinning it into a clever political tagline: “If you’re a taxpayer, you’re an AIDS activist.” The line reflects a classic scrimmage call from Bono’s leadership playbook: One, spread the credit liberally for every success. Two, remind people that they are essential to the mission. Three, ask for more. Repeat steps one through three. Lest you think Bono is some dilettante celebrity hobnobbing with the Davos crowd, consider the man’s record. Fewer people have been more effective at shining a stage light on poverty, particularly in Africa, and in influencing governments and large corporations to work together to alleviate it. For Bono, the “lobbying” effort began with the global Jubilee 2000 initiative, a campaign founded by British economist Ann Pettifor to ask world leaders to forgive the debts of the poorest countries by the turn of the millennium. The campaign was inspired by the biblical decree that every 49 years, debts should be forgiven and slaves freed; Bono was moved by the notion—it spoke to his deeply held Christian ethos. And so in the late 1990s, the rock star found himself in the office of then–U.S. Treasury Secretary Larry Summers, stumbling through his prepared pitch. His career as a lobbyist might have ended there, Bono says, were it not for the kindness of Summers’ chief of staff, Sheryl Sandberg, who stepped in to help. What appealed to Bono, perhaps even

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“Actions, actions, actions,” says Bono. “It’s about being useful, and that’s what I want to be.”

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No. 14 BONO

Vanquishing a Virus Pepfar and the Global Fund have substantially lessened the scourge of AIDS in Africa. PEOPLE RECEIVING ANTIRETROVIRAL THERAPY WORLDWIDE 15 MILLION

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more than the mission, was the strategy behind the effort. Musician Bob Geldof, the creator of the Live Aid concert, walked him through the math. “The $125 million we raised with that show was less than what African countries were paying in interest on the debt every day,” says Bono. Even a slate of showy benefit concerts would never solve the problem. Forgiving the debt would—by freeing up resources that could, in turn, be used for education, infrastructure, health care, and more. The campaign led to the cancellation of more than $100 billion of debt owed by 35 of the globe’s poorest countries, according to the World Bank. To Bono, though, what mattered wasn’t just the outcome; it was also the strategy behind it. Debt forgiveness was a clever use of leverage, and the idea stuck. In 2005 he started the One campaign, a volunteer-led movement to influence lawmakers to commit resources to funding programs that truly change the lives of the poor—from Pepfar (which continues to provide lifesaving antiretroviral drugs); to the Global Fund, the Geneva-based not-forprofit that finances select local programs fighting AIDS, TB, and malaria; to Gavi, a public-private partnership that provides needed vaccines to kids; to an effort that Bono is particularly excited about now: the Electrify Africa Act, which was passed by Congress in December 2015 and signed into law in February. Its aim is to help some 50 million people in sub-Saharan Africa get electricity for the first time through the support of private investment in the region. It made it through a gridlocked Congress with almost no fanfare. But for One members, who had been engaged in a yearlong campaign of targeted support, it was a wonky dream come true. The driving notion of the One campaign, again, is leverage—think of it as a scaling mechanism for Bono’s own commitment, a Willy Wonka–like device that amplifies the voices of 7 million like-minded activists. For the past 10 years these volunteers have faxed, called, written, tweeted, and visited lawmakers to deliver on their funding commitments. But candy stripers

they’re not. The training is in-depth and sophisticated, teaching volunteers everything from the minutiae of the appropriations process to Capitol Hill etiquette, and giving them congressional-level briefings on health, education, and energy-security issues in Africa. As nonprofits go, its constituency of volunteers is surprisingly purple—neither liberal blue nor conservative red, at least in rhetoric. The organization, like Bono, is thoroughly cloaked in bipartisan cloth—a staunchly inclusive, make-no-villains enterprise. “There is nothing quite like them on the Hill,” says Sen. Chris Coons of Delaware. “They come every year. They’re polite, prepared, and persistent.” The cross-the-aisle approach found its apex with Pepfar. The tale, indeed, is now the stuff of legend on the Hill—an Atticus Finch tale of how Bono got North Carolina’s Sen. Jesse Helms to change his mind. Bono, for his part, waves off the credit. “I don’t accept that it was me,” he says. “But I will say that we found a way to deal with the supposed ‘opposition’ by taking them out of caricature.” On the religious right in the 1980s, there was no greater opponent of AIDS funding than Helms, who railed against the LGBT community as “perverts” and as “weak, morally sick wretches” falling prey to “a gay disease.” Bono was unfazed. Tapping the network of evangelical faith leaders whom he had worked with during the debt-forgiveness campaign, Bono began to meet with conservative lawmakers about Pepfar. It was a conversation of data and faith, two languages with which he is deeply familiar. “We showed them the obvious similarity between HIV and the leprosy of the early New Testament,” he says. “This fight is not just foreign aid.” When he finally got to sit down with Helms, he quoted Matthew 25, which talks about suffering. “There was nothing about judgment there,” says Bono. “How could addressing this disease not be at the center of Christ’s mission? That’s where we ended up.” Helms welled up, offered a blessing, and got to work. Not only did he change his mind on AIDS funding, but he lobbied the White House himself. “Dick Cheney came

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No. 14 BONO

shouts the singer. The crowd goes wild. Repeat steps one through three. “I DON’T WANT to be in Heaven unless you’re

all here.” Again, Bono is working the crowd. Always working the crowd. This time the stage is in Heaven. That’s the name of the restaurant in Kigali, Rwanda, where yet another unlikely group of allies has gathered. We are on the second day of a three-day due diligence trip that has brought One staff together with execs at the Global Fund, health experts, security advisers, and a handful of corporate bigwigs who have partnered with One’s now-famous branding operation, called Red. Red was launched at Davos in 2006 to find creative ways for companies to contribute money to the Global Fund while raising awareness. “We operate like a startup,” says Red CEO Deb Dugan. “We work hand in hand with companies’ marketing departments to accomplish their business goals.” In the past 10 years more than $350 million has gone to the Global Fund through the sale of Red-branded products from partners like Coca-Cola, Starbucks, and Nike. Apple has contributed more than $106 million of that amount in the past 10


into the Oval Office and said, ‘Jesse Helms wants you to listen to Bono’s ideas,’ ” an amused President Bush said in his speech announcing the aid package. Then the 80-year-old senator became a fan of the band, attending concerts like they were revival meetings. Beltway insiders were genuinely surprised. Bono’s liberal friends, including bandmate the Edge, were appalled. “It was a real miracle,” laughs Pelosi. But Bono has a simpler take: “When you have a person who may appear rigidly opposed to something, look for ways to widen the aperture of their narrow idealistic view,” he says. “We like to think of ourselves as an unlikely group having unlikely conversations that get stuff done,” he says. It’s a message that cuts across the generations, which has become one of One’s enduring strengths. When U2 finally takes the stage at New York’s Madison Square Garden last July, Bono fulfills a promise he made to the young Barbara Bush at the meetand-greet just moments earlier. He tells his rock-and-roll flock about the UN report announcing huge gains in the fight against AIDS, and then mentions a name that some in the raucous arena have probably forgotten. “We need to thank President Bush,”

years. “It’s been a unique way for us to use our skills to raise awareness and participate in changing things for the better,” Apple CEO Tim Cook—who, like most of Red’s corporate partners, was personally courted by Bono—tells Fortune. “Bono has this unusual mix of traits that combines idealism and action,” Cook says. “Most people only have one, but he has both. We bet on him.” Muhtar Kent, CEO of Coca Cola, is equally effusive about Bono. “There is no one better who can harness the emotion and soul and value of people,” says Kent. The two met at Davos in 2011, where Kent stood onstage with Bono—and Presidents Bush, Clinton, and Obama— and pledged to partner with Red. CocaCola has raised $8 million since 2011 and has pledged $6 million more through 2018. All of it goes to the Global Fund. “He dreams big and then works so hard to get things done,” says the Coke CEO of Bono. The two have become close since 2011 and traveled together across Africa. Each of them has a daughter who graduated from Columbia University the same year—another chance for bonding.

Far left: Bono poses with Bill Gates at the World Economic Forum annual meeting in January 2015 to mark the 10-year anniversary of Red.

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Near left: Jane Anika from Green Energy Africa, a local NGO, shows two Maasai girls how to use a solar lamp in the village of Koora, Kenya.

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No. 14 BONO

The Bono Balance Sheet Bono and U2, idealistic capitalists, have shown a knack for creating and deploying wealth over the past four decades.

ALBUM SALES U2 has released 13 albums since 1980 and has sold about 175 million records for (very roughly estimated) revenue of about $1.8 billion.

TOURING, EARNING U2’s 360° Tour, from 2009 to 2011, was the highest-grossing tour of all time, with a final gross of $736.4 million, according to Live Nation.

BOARDROOM BONO Bono co-founded Elevation Partners, a private equity group and early Facebook investor. He sits (with bandmate the Edge) on the board of Fender Guitars and advises Fender’s owner, equity fund TPG Growth.

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GO, GO, NGO The advocacy group Red has raised $350 million since 2006 to combat AIDS, connecting Bono with leaders at Nike, Starbucks, Coca-Cola, and other top corporations.

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In 2004, Apple sold thousands of special-edition U2 iPods and box sets; in 2014, Apple released its “Songs of Innocence” for free via iTunes—which in turn boosted sales of U2’s back catalogue.

and loads of gratitude for the contributions of those in the room. He is at once expected and surprising. I have to remind myself every so often that the man in the cool shades (which he wears, by the way, to protect eyes that have been troubled by glaucoma for two decades) is a rock star. With 13 studio albums—seven of which hit No. 1 on the Billboard charts— U2 is among the most successful bands in rock history. Part of the secret to its success has been its independence. “We own our masters, we own ourselves,” Bono says, and the band members operate as equal, collaborative artists, without the pressure of corporate overlords. “They don’t sound like anyone else,” says Tom Freston, the founder of MTV and One’s board chair. “And they’ve been making music that resonates with people for decades.” But as Bono has grown in music stature, he has also matured as a businessman. He co-founded Elevation, a private equity firm created in 2004, a high performer thanks to investments in Facebook, Yelp, BioWare, and Pandemic Studios. And in 2014 he became a special partner in TPG Growth, a global investment group with $7 billion under management. The founder, Bill McGlashan, had purchased Fender the year before and asked Bono to join the guitar company’s board. Bono’s ability to think strategically about Fender’s future earned him a fan in McGlashan. For Bono there is a wondrous simpatico between music, development work, and investing. And in each area his relentless drive is unmistakable. When asked point-blank about where this drive comes from, Bono seems unsure. “You know,” he says, “we have a family prayer. And that is to be useful.” He falls silent. “I think that’s as close to it as I can get” to an answer. BEING IRISH also plays an important part in

Bono’s identity, and one that helps him explain, at least to himself, why he’s been so drawn to development work. He posits that “Ireland has a real living memory of famine and shaking off colonialism,” and is still healing the scars of violence, poverty, and despair. “I believe development can work


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Add to that list of Bono admirers Howard Schultz. Last summer when the Starbucks CEO tore his Achilles tendon, he says, Bono came to check on him. “Just him alone,” says Schultz, “walking through my door and spent an entire day.” But while Schultz clearly cherishes the friendship, he seems genuinely inspired by the rock star’s humanitarian bent and leadership ability. “I can tell you that he is a true authentic servant leader,” says Schultz. “He might be onstage and the lights are very bright. But when the cameras are off and no one is watching, I think that’s when you really know who someone is. He’s the real deal.” Other friends who have become allies in Bono’s war on poverty—including celebrity chef Mario Batali and Bank of America vice chair Anne Finucane—have made the effort to join him in Kigali. The trip, says Finucane, whose company has given $10 million to Red since 2014 and just committed an additional $10 million over the next five years, has reinforced her resolve to help: “It was life changing,” she says, to put actual faces and names to the lives saved by two pills a day. A congressional delegation—Sen. Coons, a Democrat, and Rep. Kay Granger, a Republican from Texas—is also on hand. Granger leads an appropriation subcommittee that funds all the work that One lobbies for. Earlier in the day the traveling entourage descended upon a 50-acre plot of land filled with solar panels, an array developed by Gigawatt Global, which is providing electricity to the area. Microphone in hand, Bono—clad, as always, in the mildest of rock uniforms: something black, something leather, serious boots, earrings—delivers the Bono Experience: some data, some stories, some good news,

in Africa because it worked in Ireland.” Bono, born Paul Hewson, lost his mother at 14, a heartbreaking event that turned him toward art. “It was to heal the wound,” he says. U2 has been together since they were teenagers at the progressive Mount Temple high school in Dublin. “We couldn’t play our instruments, so we had to be punk rockers.” It was also where he fell in love with Alison Stewart, whom he would eventually marry. “I met my wife and my band in the same week,” he likes to say. Bono and Alison Hewson have four children: daughters Jordan, 26, and Eve, 24, who both live in New York City, and sons Elijah, 16, and John, 14. Living mostly in Dublin has let Bono have a fairly normal life, close to friends and family, including people who aren’t all that impressed with the rock star thing. One sore point is that U2 has chosen to domicile one of their companies in the Netherlands for tax purposes. He’s defended the move publicly as smart business but doesn’t wave off the critique. “I hear about things down at the pub, all right,” he says. But make no bones, Bono’s Irish sensibility and sense of history seem to give him a courage to act where others might look away. Ten years ago, when Bono first visited University Teaching Hospital in Kigali, there were three people to a cot, another three underneath on the floor, and long lines of desperate people waiting for a test to confirm that they were going to die of a disease that was being managed effectively in wealthier countries. No medicine was coming. It resurrected deep moral questions for Bono about who gets access to life-saving medication and why—and how political indifference and systemic poverty are often the only things condemning people to terrible deaths. “Why should where you live determine whether you live?” Ten years later there is real cause to be optimistic. The same facility now has 560 beds in an orderly collection of low, mostly single story buildings

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“There is no one better who can harness the emotion and soul and value of people than Bono. He dreams big and then works so hard to get things done.”

arranged by specialty: surgery, oncology, maternity, and pediatrics. Some $70 million has come to Rwanda through carefully monitored programs funded by the Global Fund. A countrywide health care system that helps screen and support HIVaffected Rwandans, particularly in rural areas, seems to be working. AIDS deaths have been reduced from 13,000 in 2000 to 3,000 in 2014. Best of all, there were only 36 known examples of mother to child transmission of HIV in 2014. Bono and his One co-founders—British activists Jamie Drummond and Lucy Matthew—take a rare moment to enjoy the progress when the delegation visits last August. (Bobby Shriver is the group’s fourth cofounder.) Drummond, Matthew, and Bono met during the Jubilee effort. Bandmates of a different sort, they’ve collaborated for so long, they speak to each other in shorthand, finishing each other’s sentences while they huddle over laptops and plan strategy. Drummond shares a story that describes the way they have learned to think about development work. “In the 1990s I worked on things called complex emergencies,” he says, massive humanitarian catastrophes when the world seems at its worst: Ethiopia after the civil war, Afghanistan as the Taliban was taking over, Rwanda after the genocide. “It feels important; it’s grim and highly addicting work.” The media shows up; rock stars throw concerts. But what if you could stop the emergency from happening? What if you could get ahead of it? IF BONO HAS A MOTTO, he’s adapted it from St. Francis: Go into all the world to preach the gospel, and if necessary, use words. “I love that one,” he says. “Actions, actions, actions. It’s about being useful, and that’s what I want to be.” This year One arranged for 200 of its volunteers to meet with 30 U.S. senators (or high-level staffers), an extraordinarily high number, to advocate for “replenishing” the Global Fund, among other tasks. The training of next-generation leaders is critical for the long-term prospects of the enterprise. “In order for this to be sustainable, it can’t depend on me,” says Bono.

Interestingly, though, One is becoming ever more dependent on something else: Africa. There are more than 3 million One members on the continent; it is the organization’s fastest-growing cohort. And with this shift in membership has come an evolution of message: pushing the “ask” conversation less toward financial aid and more toward assistance in development. After Rwanda, Bono and his One/Red delegation visited the CoCreation Hub in Lagos, an incubation space for technology entrepreneurs with a focus on social impact. Women’s issues, health, good governance, and anti-corruption ideas are in high demand, and everyone is eager to address the nearly $1 billion in oil revenue that goes missing every month. “What could that money do for the education sector?” asks Owoicho Apochi Nelson, education advocate and entrepreneur. While the One team assembles a roundtable discussion on women’s rights issues in Nigeria—a major campaign of the group is called “Poverty is sexist”—Bono says the main goal of the trip is “trade and entrepreneurship.” That, he says, “is the key to ending extreme poverty on the continent. Especially now, Africa needs jobs, millions of them. But without outside investment, which is typically afraid of the risks, it’s not going to happen.” To that end, last June Bono began working with TPG-Satya, a new partnership specifically focused on Africa investment. It was born of a meeting at his home in Dublin with McGlashan, his partner in TPG Growth, and One board member, African investor and development expert Dr. Mohamed “Mo” Ibrahim. Its purpose it to find smart investments that can ethically operate at scale, creating jobs along the way. “Business investments can also deliver social value,” says Bono, sounding a refrain he repeats frequently. “And for anything we do in the least developed economies, I won’t be taking a profit.” ON THE SECOND MONDAY IN MARCH, Bono and the band are back in the studio—if not quite in profit mode, then in a creative one, hopefully. They are working on some new material for when the I+E Tour picks up again later this year. U2’s celebrated front man


is getting all philosophical. “We really were a band of thieves,” he says of the early days of One. It’s an operating principle he brought from being in the band, where everyone is equal. “The best ideas should prevail wherever they come from—even if they’re from outside the band. In fact, everything is possible as long as it’s not your idea,” he laughs. And that’s the faith he’s bringing to the next 10 years. “The ideas are out there.” When Bono says he is a follower, he does mean Christ, specifically where it relates to caring for the poor. “I’ve just never felt that I could wear the badge,” he says. “I’m a true believer. I just don’t go on about it because I’m suspicious of people who do.” But in an elegant switch, One turns politicians around the world into followers as well— followers of the will of their citizens. “We hold them accountable,” says Bono. There have been rough moments in this journey, certainly. “I’ve spent way too much time in the hospital lately,” says Bono. In 2010 he was rushed into surgery after a herniated disc and compressed sciatic nerve nearly paralyzed him. It forced the band to cancel the U.S. leg of their 360° Tour. Then, in November 2014, Bono had a nasty cycling accident in New York’s Central Park, damaging his eye socket and pinky finger, fracturing his left shoulder, and driving his bone through the skin of his left arm in six places. It was a humbling reminder that even the greatest spirit is still the captive of the body. He shares a piece of advice given to him by his friend Brendan Kennelly, an Irish poet. Bono says he’s using the words as inspiration for his songwriting: “If you really want to get to the place”—the dark heart of the matter— “write as if you’re dead. You won’t be worrying about what anyone is thinking, won’t have any ego.” Bono says that’s his plan now: He’s going to write songs as if they were the last ones he’ll ever write. He pauses for effect—hell, the man is Irish—and then says: “But I sure hope they’re not.”

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April 1, 2016

about a laid-off, sad-sack, fiftysomething guy who is given one big chance to start his career over, the opening scene might begin like this: a Monday morning in April, sunny and cool, with a brisk wind blowing off the Charles River in Cambridge, Mass. The man—gray hair, unstylishly cut; horn-rimmed glasses; button-down shirt—pulls his Subaru Outback into a parking garage and, palms a little sweaty, grabs his sensible laptop backpack and heads to the front door of a gleaming, renovated historic redbrick building. It is April 15, 2013, and that man is me. I’m heading for my first day of work at HubSpot, the first job I’ve ever had that wasn’t in a newsroom. HubSpot’s offices occupy several floors of a 19th-century furniture factory that has been transformed into the cliché of what the home ILLUSTRATIONS BY of a tech startup should look like: exposed JAN FEINDT IF YOU MADE A MOVIE

On the ground floor an enormous conference room doubles as a game room, with the requisite foosball table, Ping-Pong table, indoor shuffleboard, and videogames. The cafeteria next door boasts industrial refrigerators stocked with cases of beer, cabinets with bagels and cereal, and, on one wall, a set of glass dispensers that hold an assortment of nuts and candy. It’s called the “candy wall,” and Zack beams, frosted glass, a big atrium, modern explains that HubSpotters are especially proud of it. The wall is one of the first art hanging in the lobby. Riding the elevathings they show off to visitors. It’s a young place, with lots of energy. Teams go tor to the third floor, I feel both nerves and on outings to play trampoline dodgeball and race go-karts and play laser tag. adrenaline. Part of me still can’t believe that I’ve pulled this off. Nine months ago I was unDogs roam HubSpot’s hallways, because like the kindergarten decor, dogs ceremoniously dumped from my job at Newshave become de rigueur for tech startups. At noon, Zack tells me, a group of bros week magazine in New York. I was terrified meets in the lobby on the second floor to do push-ups together. Upstairs there is that I might never work again. Now I’m about a place where you can drop off your dry cleaning. Sometimes they bring in masto become a marketing guy at one of the hotsage therapists. On the second floor there are shower rooms, which are intended test tech startups on the East Coast—a softfor bike commuters and people who jog at lunchtime, but also have been used as ware company that has created an “inbound sex cabins when the Friday happy hour gets out of hand. Later I will learn (from marketing” platform, which helps companies Penny, the receptionist, who is a fantastic source of gossip) that at one point things got so out of hand that management pull customers in (through blogs, social pubhad to send out a memo. “It’s the people from lishing, and other content), in contrast to outsales,” Penny tells me. “They’re disgusting.” bound marketing (traditional advertising). Later I also will hear a story about janitors There is one slight problem: I know nothing coming in one Saturday morning to find the about marketing. This didn’t seem like such a following things in the first-floor men’s room: big deal when I was going through the intera bunch of half-empty beers, a huge pool views and talking these people into hiring me. of vomit, and a pair of thong panties. The Now I’m not so sure. janitors were not happy. They get even more I reassure myself by remembering that distressed when, one morning, a twentyHubSpot seems pretty excited about having something guy from the HubSpot marketing me come aboard. Cranium (my endearing department arrives wasted and, for reasons name for the fellow), the chief marketing offiunknown, sets a janitor’s cart on fire. cer, or CMO, wrote an article on the HubSpot Dan Lyons, a writer Everyone works in vast, open spaces, blog announcing that he had hired me. Tech for the HBO series Silicon crammed next to one another like seamblogs wrote up the story of the 52-year-old Valley, is a novelist stresses in Bangladeshi shirt factories, only Newsweek journalist leaving the media busiand screenwriter. He is a former editor instead of being hunched over sewing maness to go work for a software company. at Newsweek. chines people are hunched over laptops. A guy named Zack meets me and tells me Nerf-gun battles rage, with people firing he’s sorry Cranium isn’t here today, but he weapons from behind giant flat-panel moniwants to give me a tour around the offices. tors, ducking and rolling under desks. People Zack is in his twenties. He has a friendly smile and gelled hair. He reminds me of hold standing meetings and even walking the interns at Newsweek, recent college graduates who did background research meetings, meaning the whole group goes for the writers. I figure he must be someone’s assistant. for a walk and the meeting takes place while The offices bear a striking resemblance to the Montessori preschool that you’re walking. my kids attended: lots of bright basic colors, plenty of toys, and a nap room with a hammock and soothing palm tree murals on the wall. The office-asNobody has an office, not even the CEO. playground trend was made famous by Google and has spread like an infecThere is a rule about this. Every three months, tion across the tech industry. Work can’t just be work; work has to be fun. everyone switches seats, in a corporate version HubSpot is divided into “neighborhoods,” each named after a section of Bosof musical chairs. HubSpot calls this a “seating ton: North End, South End, Charlestown. One neighborhood has a set of hack” and says the point is to remind everyone musical instruments, in case people want to have an impromptu jam session, that change is constant. If you want privacy, which Zack says never happens. Every neighborhood has little kitchens, with you need to book one of the meeting rooms automatic espresso machines, and lounge areas with couches and chalkboard that are strung around the edges of the workwalls where people have written things like “HubSpot = cool” alongside inspiing spaces. Some meeting rooms are named rational messages like “There is a reason we have two ears and one mouth. So after Red Sox players, others after “famous that we listen twice as much as we speak.” marketers”—I take a moment to let that sink in. Some have beanbag chairs instead of actual furniture, and in those rooms people sprawl out, with laptops propped on their knees. 110 FORTUNE.COM April 1, 2016 Book Excerpt: DISRUPTED

heads and seem to be eating it up. Most of E V E R Y N E W H U B S P O T employee has to go through training to learn how to them are right out of college, clean-cut and use the software. That’s a good idea, and it also keeps me from having to worry well scrubbed. The guy next to me has a buzz about what I’m supposed to be doing here, or why Cranium, who hired me, still cut and just graduated from some college in has never come by to say hello or talk about what he wants me to work on. New Hampshire. He tells me that he lives Training takes place in a tiny room, where for two weeks I sit shoulder to with his parents and commutes an hour to shoulder with 20 other new recruits, listening to pep talks that start to sound get here, but he’s thinking about moving like the brainwashing you get when you join a cult. It’s everything I ever imagcloser to Boston and getting his own place. ined might take place inside a tech company, only even better. Our head trainer is Dave, a wiry, energetic guy in his forties with a shaved head and a gray goatee. On the first day we all go around and introduce ourselves, and H U B S P O T D O E S N ’ T J U S T S E L L this softtell everyone about something that makes us special. Dave’s thing is that he plays ware—it also teaches people how to use it and in a heavy-metal cover band on weekends. in general how to be more effective at selling Dave is part teacher and part preacher. Every two weeks he gets a batch of stuff online. At its annual customer confernew recruits, and he goes through the same spiel, showing the same slides, ence, Inbound, thousands of online markettelling the same jokes. He’s good at it. He loves HubSpot, he tells us, unabashers flock to Boston to learn new tricks. One edly. He’s had lots of jobs, and this is by far the best place he’s ever worked. involves using a misleading subject line in an email—something like, “fwd: your holiday This company has changed his life. He hopes plans”—to dupe people into opening the mesit will change ours as well. sage. “Boosting your open rate,” they call it. At “We’re not just selling a product here,” the conference HubSpot also shows off new Dave tells us. “HubSpot is leading a revoluThe offices features and products, like one that puts a tion. A movement. HubSpot is changing the bear a striking tracking cookie on the computer of everyone world. This software doesn’t just help comresemblance to who visits your website and keeps track of evpanies sell products. This product changes the Montessori ery page the person visits. The software can people’s lives. We are changing people’s lives.” preschool that even send you an alert when someone comes He tells a story about a guy named Branmy kids attended: back to your website for a second visit—so don, a pool installer in Virginia. His business lots of bright you can call that person immediately and was struggling. He could barely get by. But basic colors, say, “Hey, I see you’re on our website! Is there then he started using HubSpot software, and plenty of toys, something I can help you with?” his business took off. Soon his company was and a nap room That’s the business we’re in: Buy our softinstalling pools all around the country. He with a hammock ware, sell more stuff. There’s nothing wrong was rich! Eventually he was doing so well that and soothing palm with that, but that’s not exactly how HubSpot he hired someone else to run his pool comtree murals on bills itself or describes what it does. In trainpany so that he could become a motivational the wall. ing we’re taught that the billions of emails speaker. He travels the world spreading the that we blast into the world do not constitute gospel of inbound marketing, transforming email spam. Instead, those emails are what the lives of thousands of other people. we call “lovable marketing content.” That is really what our trainers call it. The “This guy has become a superstar,” Dave convoluted logic behind this is that “spam” means unsolicited email, and we says. “He’s a rock star. And it all started with send email only to people who have handed over their contact information by HubSpot. That’s what we’re doing here. filling out a form and giving us their permission to be contacted. Our emails That’s what you are part of.” might be unwanted, but they’re not, strictly speaking, unsolicited, and thereThe truth is that we’re selling software that fore they are not spam. And even though we and our customers send out literlets companies, most of them small businesses ally billions of email messages, we’re not trying to annoy people—in fact we like pool installers and flower shops, sell more are trying to help them. Sending one message after another, each time with a stuff. The world of online marketing, where different subject line, is how we discover what someone wants. We’re learning HubSpot operates, though, has a reputation about them. We’re listening to them. for being kind of grubby. Our customers inThus, what we’re creating is not spam. In fact, the official line is that HubSpot clude people who make a living bombarding hates spam and wants to stamp out spam. We want to protect people from people with email offers, or gaming Google’s spam. Spam is what the bad guys send, but we are the good guys. Our spam is search algorithm, or figuring out which kind not spam. In fact it is the opposite of spam. It’s antispam. It’s a shield against of misleading subject line is most likely to spam—a spam condom. HubSpot has even created a promotional campaign, trick someone into opening a message. Online with T-shirts that say make love not spam. marketing is not quite as sleazy as Internet porn, but it’s not much better either. Nevertheless, Dave is laying it on thick, and the new recruits are nodding their April 1, 2016 FORTUNE.COM 111

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model that a lot of other startups have emulated. When Dharmesh posted his slides online they received more than 1 million views. This inspired him so much that now he is setting out to write a book about corporate culture.

feels like landing on some D H A R M E S H ’ S C U LT U R E C O D E incorporates elements of HubSpeak. For examremote island where a bunch of people have ple, it instructs that when someone quits or gets fired, the event will be referred been living for years, in isolation, making up to as “graduation.” In my first month at HubSpot I’ve witnessed several graduatheir own rules and rituals and religion and tions, just in the marketing department. We’ll get an email from Cranium saylanguage—even, to some extent, inventing ing, “Team, just letting you know that Derek has graduated from HubSpot, and their own reality. This happens at all orgawe’re excited to see how he uses his superpowers in his next big adventure!” nizations, but for some reason tech startups Only then do you notice that Derek is gone, that his desk has been cleared out. seem to be especially prone to groupthink. Somehow Derek’s boss will have arranged his disappearance without anyone Every tech startup seems to be like this. Beknowing about it. People just go up in smoke, like Spinal Tap drummers. lieving that your company is not just about Nobody ever talks about the people who graduate, and nobody ever menmaking money, that there is a meaning and tions how weird it is to call it “graduation.” For that matter I never hear anyone a purpose to what you do, that your company laugh about HEART or make jokes about the culture code. Everyone acts as if all of these things are perfectly normal. has a mission, and that you want to be part HubSpotters talk about being “superstars of that mission—that is a big prerequisite for with superpowers” whose mission is to “inworking at one of these places. spire people” and “be leaders.” They talk At HubSpot, employees abide by precepts We want to about engaging in “delightion,” which is a outlined in the company’s culture code, a protect people made-up word, invented by Dharmesh, that document that codifies HubSpot’s unusual from spam. Spam means delighting our customers. language and sets forth a set of shared valis what the bad The ideal HubSpotter is someone who exues and beliefs. The culture code is a maniguys send, but hibits a quality known as GSD, which stands festo of sorts, a 128-slide PowerPoint deck we are the good for “get shit done.” This is used as an adjectitled “The HubSpot Culture Code: Creating guys. Our spam is tive, as in “Courtney is always in super-GSD a Company We Love.” not spam. In fact mode.” The people who lead customer training The code’s creator is HubSpot’s co-founder. it is the opposite seminars are called inbound marketing proInside the company he is always referred to of spam. It’s fessors and belong to the faculty at HubSpot simply by his first name, Dharmesh, and antispam. It’s Academy. Our software is magical, such that some people seem to view him as a kind of a shield against when people use it—wait for it—one plus one spiritual leader. Dharmesh claims it took him spam—a spam equals three. Halligan and Dharmesh first in100 hours to make the slides. He sent me a condom. troduced this alchemical concept at HubSpot’s link to the slide deck a few days after I interannual customer conference, with a huge slide viewed with him and his co-founder, Brian behind them that said “1 + 1 = 3.” Since then it Halligan, I suppose as an inducement to join has become an actual slogan at the company. the company. He said it was a slide deck that “describes HubSpot’s culture.” People use the concept of one plus one equals The code depicts a kind of corporate utopia where the needs of the indithree as a prism through which to evaluate new vidual become secondary to the needs of the group—“team > individual,” one ideas. One day Spinner, the woman who runs slide says—and where people don’t worry about work-life balance because PR, tells me, “I like that idea, but I’m not sure their work is their life. that it’s one-plus-one-equals-three enough.” The culture code asks, “What does it mean to be HubSpotty?” and then defines the meaning of that term, explaining a concept that Dharmesh called HEART, an acronym that stands for humble, effective, adaptable, remarkable, I T T U R N S O U T I’ve been naive. I’ve spent 25 and transparent. These are the traits that HubSpotters must possess in order years writing about technology companies, to be successful. The ultimate HubSpotter is someone who can “make magic” and I thought I understood this industry. while embodying all five traits of HEART. But at HubSpot I’m discovering that a lot of Much of the code is “aspirational,” as Dharmesh concedes, meaning that what I believed was wrong. some of these values are ones that HubSpot doesn’t actually put into practice I thought, for example, that tech compayet but hopes to someday. One of HubSpot’s values involves being transparent, nies began with great inventions—an amazand not just transparent but “radically and remarkably transparent.” ing gadget, a brilliant piece of software. At The culture code has been an enormous PR coup for the company and a Apple, Steve Jobs and Steve Wozniak built a personal computer; at Microsoft, Bill Gates and Paul Allen developed programming languages and then an operating system; 112 FORTUNE.COM April 1, 2016 ARRIVING HERE

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Book Excerpt: DISRUPTED

Sergey Brin and Larry Page created the Google search engine. Engineering came first, and sales came later. That’s how I thought things worked. But HubSpot did the opposite. HubSpot’s first hires included a head of sales and a head of marketing. Halligan and Dharmesh filled these positions even though they had no product to sell and didn’t even know what product they were going to make. HubSpot started out as a sales operation in search of a product. Another thing I’m learning in my new job is that while people still refer to this business as the “tech industry,” in truth it is no longer really about technology at all. “You don’t get rewarded for creating great technology, not anymore,” says a friend of mine who has worked in tech since the 1980s, a former investment banker who now advises startups. “It’s all about the business model.

The market pays you to have a company that scales quickly. It’s all about getting big fast. Don’t be profitable, just get big.” That’s what HubSpot is doing. That’s why venture capitalists have sunk so much money into HubSpot, and why they believe HubSpot will have a successful IPO. That’s also why HubSpot hires so many young people. That’s what investors want to see: a bunch of young people, having a blast, talking about changing the world. It sells. Another reason to hire young people is that they’re cheap. HubSpot runs at a loss, but it is labor-intensive. How can you get hundreds of people to work in sales and marketing for the lowest possible wages? One way is to hire people who are right out of college and make work seem fun. You give them free beer and foosball tables. You decorate the place like a cross between a kindergarten and a frat house. You throw parties. Do that, and you can find an endless supply of bros who will toil away in the spider monkey room for $35,000 a year. On top of the fun stuff you create a mythology that attempts to make the work Excerpted from Disrupted: My Misadventure in seem meaningful. Supposedly millennials the Start-Up Bubble, by Dan don’t care so much about money, but they’re Lyons, which is being published very motivated by a sense of mission. So, you by Hachette Books on April 5. give them a mission. You tell your employees Copyright © 2016. how special they are and how lucky they are

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to be here. You tell them that it’s harder to get a job here than to get into Harvard and that because of their superpowers they have been selected to work on a very important mission to change the world. You make a team logo. You give everyone a hat and a T-shirt. You make up a culture code and talk about creating a company that everyone can love. You dangle the prospect that some might get rich. in late 2014, I stop by my boss’s desk and tell him I’ve been offered a new job. I won’t start until January, but I am giving him six weeks’ notice. He asks me to reconsider. I tell him I appreciate the offer, but I’ve made up my mind. Soon, I know, word will get out that I am “graduating.” It’s a strange but somehow satisfying feeling to know that, roughly three decades after my college career has ended, I am set to go through that ritualized departure once more. I am going to be like so many other HubSpot graduates I’ve seen come and go over the past several months—“using my superpowers in the next big adventure!” But the email that Cranium sends to the HubSpot faithful that evening doesn’t mention anything about any of that. It just implies that I’ve been fired—and that Friday will be my last day.


HubSpot filed for an IPO on Aug. 25, 2014, and launched under the symbol HUBS on the New York Stock Exchange that October, with a market valuation of $880 million. Dan Lyons left HubSpot in December 2014. He never signed the nondisparagement and nondisclosure paperwork the company gave him. (HubSpot says it won’t comment on employee agreements.) On July 29,

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2015, HubSpot issued a press release saying its CMO, Mike Volpe—the man called “Cranium” in Lyons’s book—had been terminated because he “violated the Company’s Code of Business Conduct and Ethics” in his “attempts to procure” a copy of a book involving HubSpot, presumably the book excerpted above, a fact that HubSpot confirmed with Fortune. We attempted by email and telephone to contact Mr. Volpe for comment; we were unable to reach him. When asked for comment on Lyons’s experience at the company, HubSpot CEO and co-founder Brian Halligan said the following: “We believe that to build a great company today, it’s essential to have a point of view on how the world has changed, what you are doing about it and why it matters. We started HubSpot a decade ago believing that the way people buy and sell had fundamentally changed. We saw an opportunity to help organizations adjust to that shift, and today we’re proud to have more than 18,000 customers who have chosen to partner with us to transform how they market and sell.”

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April 1, 2016

while you were out

How to Kill a Good Idea

The last thing your company needs is an innovative proposal that might disrupt the daily routine or, worse, make you look bad. By Stanley Bing

Good ideas are deeply threatening to the everyday run of business. They get in the way of all the other things people are doing. That’s the motivation side. As for implementation? There are a host of ways that even the best idea can be strangled in its cradle. Here are some classics. 1. MEETING IT TO DEATH: This is often referred to politely as a “Japanese no.” Meeting after meeting is held to reach absolutely no conclusion, and even if one is reached, it’s never communicated. Anybody who’s ever had a movie script “in development” can relate. 8. IT’S GOOD:

2. DEPOSITING IT WITH THE WELLMEANING BUT POWERLESS: Earnest subordinates generally have a lot of good ideas of their own, but a limited ability to execute them. After a time, they will produce an excellent document that can be studied until it isn’t. 3. BIGFOOTING IT: You don’t have to be a very big yeti to step on things. You just have to have a loud opinion. A strong view is relatively rare in corporate life. Those who have one often prevail. 4. CHAMPIONING IT TO DEATH: Hurray for this great idea! We’ll get to it next Tuesday! 5. SHOOTING THE MESSENGER: There are many, many organizations that actually punish the bearer of an idea that’s not generated by an ultra-senior executive. In such places it’s best not to have ideas at all. But that doesn’t stop people, does it? Okay, I’ll admit it. This wasn’t a totally academic exercise. Last month a guy who works for me had a smart idea. I sent him to the proper part of the organization to get it underway. But now they’ve put it in a committee of some kind. I’m told that a report is coming soon. Screw that. There’s one thing that eradicates this kind of nonsense: an angry senior officer. That’s me. I know who to talk to. Don’t worry. It won’t take them long to get the idea.

Follow Stanley Bing at and on Twitter at @thebingblog.

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illustr ation by gu y shield

are complex entities. There are many people working for them, usually. And by “many” I mean more than two. This creates politics and conflicting agendas and fuels the constant battle between forward momentum and inertia—with proponents on both sides. Somewhere in all of that, an idea is occasionally born. A little flower pops its delicate head up through the organizational macadam and, against all odds, succeeds in blossoming into a healthy plant. Most of the time, though, somebody comes along with a heavy vehicle and runs over it. Given that reality, it’s important to review why and how organizations kill ideas. I hope you find this exercise helpful the next time you want to be the one driving the truck. Or when your flower is about to get crushed. To begin, let’s look at some reasons an idea might get killed. 1. IT’S BAD: 85.4% of all ideas are useless, time wasting, distracting, aggravating to too many people, dangerous, boneheaded, or just plain superfluous. Unless they come from a senior officer, they are easily squelched. 2. YOU DIDN’T THINK OF IT: Other people’s ideas are a drag, aren’t they? You were doing something else. Now you have to think about this? Forget it. 3. IT THREATENS YOUR TERRITORY: Sure, it’s an intriguing notion. But executing it would put Bob or Barbra into your meeting zone. Who needs them in there? 4. IT CONFLICTS WITH SOMETHING YOU’RE DOING: Like lunch. Or vacation. Or that trip to L.A. Or whatever, right? 5. OSWALD THOUGHT OF IT: And you hate that preening little weasel. 6. YOU’RE AN INSECURE WEASEL YOURSELF: Other people may get the credit, and there’s only so much credit to go around! 7. IT’S INCONSISTENT WITH PREVAILING CULTURE: In the ’80s, you had to be for excellence. In the ’90s, you had to be for greed. Now you have to like disruption and open offices. Any contradictory notions must be terminated. CORPORATIONS

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