● The election no one wants 42

● A $1 million gift guide 53

● Big Pharma turns to AI 8

November 13, 2023

Elon Musk wants

to put this inside
your head

Any volunteers?

An exclusive look at Neuralink,

the billionaire’s brain-implant
startup, which is about to begin
human trials 34
helps you
train
tune
deploy

AI
so you
can create
the right AI
for your
business.

ibm.com/watsonx
 November 13, 2023

◀ Sharelle Rosado,
a former Army
paratrooper, had her
loan-modification
request denied

1
PHOTOGRAPH BY MICHAEL ADNO FOR BLOOMBERG BUSINESSWEEK

FEATURES 34 Elon Musk Wants Into Our Heads

His Neuralink could end a lot of human suffering. But don’t forget, this is Elon

42 Ready for a Trump-Biden Rematch?

It’s all but inevitable. Here’s how we got here

46 Foreclosing on Veterans
A lot of them are losing their mortgages as a post-Covid program expires
 ◼ CONTENTS Bloomberg Businessweek November 13, 2023

◼ IN BRIEF 4 Big Tech rebounds ● Abortion law ● Solar power ◼ COVER TRAIL
◼ OPINION 5 The downside of those handy financial apps you’re using How the cover
◼ AGENDA 5 Biden and Xi ● US inflation ● Kung fu fighting! gets made

“This week’s story is

about—”
◼ REMARKS 6 Crypto is rallying, and guess who’s partly to thank for it
“Let me guess: Elon.”

BUSINESS 8 Drug trials are racially skewed. Maybe AI can help “Wait. What? How did
1 10 Attention, foreigners: Fewer Americans want an MBA
you know?”

“It’s been a while

12 Sure, the public loves Marvel—but not this much Marvel since our last one,
and I figured you were
getting antsy. What’s
TECHNOLOGY/ 16 JetZero’s geometric recipe for a farther-flying plane
2 INNOVATION 18 Universal translators: A dark horse gains on Google
he got going on now?
Another social media
takeover? Brawling
19 The solution to renewable fuel may lie in … oilier soybeans with the UAW? A CEO
Fight Club?”
FINANCE 22 Wealthy, but not quite 1%? Private equity wants you “Brain surgery.
3 24 Public transit faces up to its post-pandemic hangover Specifically, implants.”

“Wow. Did not see that

coming. I assume he’s
ECONOMICS 26 An economy not too hot, not too cold, just right—for now
4 28 Lavish living. Low taxes. Of course the rich like Uruguay
approaching this with
a sense of caution
and patience?”
30 ▼ Weed may not stay illegal in the Netherlands for long
“Um … sure. But he’s
also provided a sense
of impending doom.”

“What’s he so nervous
about?”

“AI.”
2 “Wait. But didn’t he
just announce an AI
company?”

“The man contains

multitudes.”

ECONOMICS: PHOTOGRAPH BY CAROL SACHS FOR BLOOMBERG BUSINESSWEEK

◼ PURSUITS/ 53 Sixty-seven irresistible gifts that will be happily seen,

HOLIDAY GIFT GUIDE felt, heard, smelled and tasted—and might even send
your loved ones to a higher plane

◼ LAST THING 64 The essential Elon, as rendered on Businessweek covers

How to Contact Bloomberg Businessweek

EMAIL bwreader@bloomberg.net ● TWITTER @BW ● INSTAGRAM @businessweek ● FACEBOOK facebook.com/
bloombergbusinessweek ● AD SALES 212 617-2900, 731 Lexington Ave. New York, NY 10022 ● SUBSCRIPTION HELP Cover:
businessweekmag.com/service ● REPRINTS/PERMISSIONS 800 290-5460 x100 or businessweekreprints@theygsgroup.com Photograph by
Damien Maloney
for Bloomberg
Businessweek
Let’s deliver on your
carbon-neutral pledge.
If you’re in the business of commercial transportation With solutions like carbon capture, biofuels, and
or heavy industry, you already know the complexity low-carbon hydrogen power, we can work with you
of delivering on your lower-emissions goals. to lower carbon emissions in your own business.
You’ve made a pledge. Let us help you deliver.
At ExxonMobil, we’re facing the same challenge.
And we’re working to reduce our own carbon
emissions. As part of that process, we’ve developed Scan the QR code to learn more
emission-reduction technologies that work on or visit ExxonMobil.com
an industrial scale.
 Bloomberg Businessweek By Mark Leydorf, with Bloomberg News
◼ IN BRIEF
● A rally in Big Tech put
stocks on pace for their
● War in the
longest winning run in Middle East
two years, with investors ▶ With Israel’s army wholly encircling
shrugging off the Fed’s Gaza City, Palestinians in the north
of the territory are now trapped.
latest attempts to rein in Relief organizations say Israel’s
Wall Street’s bullish mood. bombing campaign has killed more
than 10,000 people—4,000 of them
The S&P 500 rose for children—and made Gaza intolerable
an eighth straight day on for the living.

Nov. 8, closing at ▶ The Pentagon deployed the USS

Florida, a nuclear-powered attack sub,

4,382.78 to the Persian Gulf. The show of force

is meant to deter Iran, which backs
Hamas and Hezbollah, from carrying
out further proxy attacks on Israel or
American forces in the region. Florida
is one of four subs converted from
carrying sea-launched nuclear missiles ● A makeshift charity kitchen feeds people in Rafah, in the southern Gaza Strip,
to Tomahawk cruise missiles. on Nov. 8. United Nations Secretary-General António Guterres said on Nov. 6 that
89 UN employees aiding refugees had been killed in Gaza since the war began.

● Prime Minister ● War in Ukraine ● “Israel for an indefinite

António Costa of ▶ The European Commission on Nov. 7

Portugal resigned
formally recommended proceeding
to the next steps in the EU accession period will have the overall
process for Ukraine and Moldova, once
on Nov. 7. they complete a series of reforms. The
security responsibility,
opinion needs to be approved by EU
leaders at its summit in December.

4 ▶ US Treasury Secretary Janet Yellen because we’ve seen what

and Secretary of State Antony Blinken
on
urged Congress to provide $11.8 billion
in budget support to Ukraine, saying it happens when we don’t.”
was “the minimum amount needed to o
Costa, in office since help cover Ukraine’s baseline needs.””
2015, led a Socialist
government backed by ▶ The nonpartisan Institute for the Prime Minister
Ministe Benjamin Netanyahu told
an absolute majority in Study of War reports increasing ABC News on Nov. 6 that Israel was prepared
Parliament. He stepped Ukrainian activity on the south bank of to take charge of the Gaza Strip. The US
down amid an investigation into y.
the Dnipro, near the town of Oleshky. anothe course. “The reality is that
is urging another
possible corruption involving lithium Whether Ukraine is expanding this there may be a n need for some transition period
and hydrogen projects. “The dignity ng
bridgehead into a new assault or trying th conflict,” Secretary of State
at the end of the
of the function of prime minister is not ar.
to pin down Russian forces is unclear. a
Blinken acknowledged on Nov. 8, “but it is
compatible with the suspicion of any impe
imperative that the Palestinian people
criminal act,” Costa said. be central to governance in Gaza.”

● The much-hyped office- ● The US is on track to

● Ohio voted to ● Ozempic and
space startup WeWork generate
protect the right filed for bankruptcy on Wegovy, meet
to access an
tion.
abortion.
Nov. 6. The company, which
commanded a $47 billion
c
vvaluation at its peak in 2019,
Zepbound.
318b
kilowatt-hours of electricity
had to navigate a failed IPO,
h from sunlight in 2024—
Covid lockdowns, a blank-
C topping what it gets
check merger and the US’s
c from hydropower for the
slow return to the office.
s first time, according to
The measure re was one of 41 statewide
In its Chapter 11 petition, government data. The
questions on the ballot across WeWork listed liabilities of crossover is likely to be
eight states on Nov. 7. In an off-year The FDA approved Eli Lilly’s diabetes
permanent, with solar

$19b
election cycle, it was a good night for drug Mounjaro to treat obesity,
Joe Biden’s party: Kentucky, a GOP unlocking blockbuster sales potential capacity expanding 44%
stronghold, reelected its Democratic in a market that’s expected to reach
governor, Andy Beshear; and purple $100 billion by 2030. Rebranded as
a year on average from
Virginia gave control of both houses and assets of $15 billion. Zepbound, the weight-loss drug will be 2009 to 2022.
of its legislature to the Democrats. sold at a slight premium to the diabetes
Also, St. Paul, Minnesota, elected its medication, or $1,059.87 a month.
first all-female city council. Zepbound will be available by yearend.
 ◼ BLOOMBERG OPINION November 13, 2023

what they really need. Nor should it be left to the banks,

The Security which might try to thwart competition by being overly restric-
tive. Instead, the CFPB should assign that responsibility to an
industry body such as Financial Data Exchange, a nonprofit

Risks of that represents both banks and third parties and has already
worked out data-sharing standards.
Finally, the bureau should establish clear liability for third

Financial Apps parties that fail to keep data secure, especially if customers
lose money. If the third party is another bank or regulated
financial company, then such rules are already established. In
other cases, banks would have to deal with the costs upfront—
For years, Americans have been giving their banking data to reimbursing customers, for instance—and then seek redress
financial apps such as Venmo, YNAB and Rocket Mortgage. through the legal system, which can take years.
And for years, banks have been trying to figure out how to As banking grows increasingly digital, making data-sharing
deal with the security risks. A proposal from the Consumer more secure is an essential goal. This proposal by the CFPB
Financial Protection Bureau suggests a better way. is a step in the right direction. <BW> For more commentary, go to
For customers, the ability to seamlessly share their finan- bloomberg.com/opinion
cial information with other companies has obvious benefits.
So-called open banking can spur competition, both by making
it easier to change providers and by encouraging innovation. ◼ AGENDA
Furnishing potential lenders with up-to-date information on
an individual’s spending and savings can also result in better
lending decisions.
All told, the practice has proved broadly popular: About
100 million consumers have authorized a third party to
access their account data. 5
Some banks resisted this trend, concerned that sensi-
tive data such as usernames and passwords—and ultimately
money—could be stolen. Others accepted the risks to keep
their customers happy. The result was a patchwork of vary-
ing permissions and security standards.
The biggest banks developed application programming
interfaces, or APIs, to transfer data more securely and
negotiated detailed agreements with the third parties that
connect apps to the banking system. But for about half of
GAZA: SAID KHATIB/GETTY IMAGES. COSTA: VALERIA MONGELLI/BLOOMBERG. NETANYAHU: JACK GUEZ/GETTY IMAGES.

third-party data access transactions, customers still need

to share their online banking credentials, a risky practice
▶ Building a Bridge
that should be phased out. Meanwhile, banks still control Presidents Joe Biden and Xi Jinping will meet at the
the terms of data sharing—not consumers. Asia-Pacific Economic Cooperation forum, which winds up
So the CFPB’s Oct. 19 proposal—which would mandate in San Francisco on Nov. 17. The US and China have been
that banks develop APIs so customers can share their data working to stabilize relations this year.
with other companies securely and free of charge—is mostly
a welcome step. As the regulator takes feedback on the plan ▶ The Bureau of Labor ▶ The National ▶ The UK’s Office for
OHIO: EMILY ELCONIN/BLOOMBERG. ILLUSTRATION BY YUKI MURAYAMA

Statistics publishes US Bureau of Statistics National Statistics

over the next few weeks, however, it should be open to month-over-month and of China puts out its reports September’s
some improvements. year-over-year inflation latest estimates of the unemployment rate
data on Nov. 14. Annual growth in industrial on Nov. 14. Analysts
First, the rule’s scope seems unnecessarily limited. inflation has been ticking production and retail expect it to inch
Information about mortgages and auto and student loans up since reaching a low sales on Nov. 14. higher, to 4.4%.
of 3% in June.
isn’t included, for instance, even though some banks have
already developed systems to share such data. Although the
CFPB plans to expand its rule over time, why not encourage ▶ The week of Nov. 13 ▶ How to Dance in ▶ Everybody will
will see a clutch of Ohio, Broadway’s first be kung fu fighting
banks to develop APIs now to cover as many information retailers—including neurodiverse musical, Nov. 16-20 in Fort Worth,
types as they would eventually need to share? Walmart, Target, Home begins previews at the site of the 2023 World
Depot, Alibaba and Belasco Theatre on Wushu Championships,
Next, deciding what data is “reasonably necessary” for an BJ’s Wholesale—report Nov. 15. In it, a group of expected to attract
application shouldn’t be up to fintech companies alone, as quarterly earnings. autistic young adults go hundreds of athletes
to a formal dance. from 80-plus countries.
in the current rule, because of the temptation to exaggerate
 ◼ REMARKS

Sam Bankman-Fried
Has Fallen.
Long Live Crypto?

6
 ◼ REMARKS Bloomberg Businessweek November 13, 2023

this market’s future that it overshadows all these negatives?

● Despite ongoing legal scrutiny in the
Well, the very fact that all these criminal cases, bankruptcies
space, the performance of the asset and regulatory actions are taking place at once has led many
class this year has defied skeptics in the industry to hope that these courthouse climaxes will
mark the end of the Wild West era of crypto and usher in a
more mature, less-chaotic phase.
● By Michael P. Regan Nowhere are expectations of that hoped-for transition
more on display than in the exchange-traded fund indus-
try, which this year saw investment giant BlackRock Inc.
Financial markets have alarmingly short memories. enter the crowded race for a spot Bitcoin ETF. It’s widely
Dreaming about the future is a much more powerful force believed that approval of one or more Bitcoin ETFs is immi-
than dwelling on the past. nent after a court in August overturned the Securities and
Just look at what transpired in the cryptocurrency mar- Exchange Commission’s rejection of Grayscale Investments
ket as the US government successfully prosecuted FTX LLC’s proposal to convert its trust into an ETF. Much of this
exchange co-founder Sam Bankman-Fried for one of the year’s rally in Bitcoin, at least, has been attributed to hopes
biggest financial crimes in history. Rather than selling off that an ETF will open up a new source of demand from the
amid the powerful reminders of how much everyone got type of investors (and their financial advisers) who previ-
wrong during the digital-asset bubble in general—and the ously were reluctant to engage with crypto-native invest-
ascendancy of Bankman-Fried’s empire in particular—crypto ment platforms. Although skeptics abound, crypto’s claim
prices continued their vigorous rebound from last year’s to fame as the year’s best-performing asset class means that
face-plant. FOMO is already percolating.
In fact, as the traditional bond market heads for what Only time will tell if this transformation to a more
may be an unprecedented third year of losses and broad mature, mainstream post-FTX era for crypto is wishful
stock market indexes cling to mostly ho-hum returns fol- thinking or not. There are signs it won’t occur without fric-
lowing last year’s bear market, crypto is poised to be the tion. Paypal Holdings Inc.’s plan to develop a stablecoin was
best-performing asset class of 2023. The price of Bitcoin swiftly met with an SEC subpoena. Coinbase Global Inc. is 7
has more than doubled this year, and some smaller coins mired in an almost-existential fight with the SEC, which
such as Solana are doing even better. Fund flows are return- sued the largest US exchange in June for allegedly failing
ing, with investors adding $807 million to crypto-focused to register with the agency as a broker, an exchange or a
exchange-traded products over the past year to bring their clearing firm.
total assets to almost $10 billion, according to data compiled Any hopes that lawmakers in the US will pass bills to pro-
by Bloomberg. There are signs that leverage in the market vide much-needed legal clarity to the crypto industry are
is ramping up, with demand for crypto borrowing sending slim, given the dysfunction on display in Congress. Even
interest rates above 10% for some stablecoins designed to if that happens, there isn’t a long list of examples of gov-
track the value of the US dollar. ernments preventing financial asset bubbles or the painful
Bankman-Fried’s conviction by no means clears the crypto busts that inevitably follow. For better or worse, that’s a job
industry’s court docket, however. Terraform Labs co-founder typically done by the market itself—and on its own time-
Do Kwon has been charged by the same US prosecutors with line, including the $2 trillion crypto wipeout last year that
orchestrating an alleged fraud that last year wiped out at destroyed Bankman-Fried’s FTX empire.
least $60 billion in market value from the TerraUSD and “Let’s remember that he operated ‘the safe and regu-
Luna cryptocurrencies, one of the triggers of the crisis at lated’ exchange, and not a single regulator caught him,”
FTX. Alex Mashinsky, the former chief executive officer of Erik Voorhees, an early crypto advocate, posted to X
Celsius Network LLC, was arrested in July and charged in after the jury returned Bankman-Fried’s guilty verdict. “It
connection with what prosecutors allege was a scheme to was, instead, the market, which is not only a great foun-
mislead customers before the crypto lender collapsed with tain of innovation, but also the best arbiter of discipline
PHOTO ILLUSTRATION BY 731; PHOTOS: GETTY IMAGES (2)

more than $1 billion in debt. He’s pleaded not guilty to the and justice.”
charges. Su Zhu, co-founder of the bankrupt Three Arrows As Bankman-Fried sits in a cell in a correctional facility
Capital hedge fund, was jailed in September in Singapore, as in Brooklyn, New York, waiting to learn how many years
liquidators applied maximum pressure after months of spar- he’ll spend behind bars, he has time to lament failures in his
ring over locating the failed company’s assets. Meanwhile, long-held ambition to pursue effective altruism—a philoso-
the Winklevoss twins’ Gemini Trust Co. and Digital Currency phy that motivated him to earn billions of dollars in crypto
Group’s Genesis Global Holdco are mired in lawsuits with so he could one day give it all away to causes that would
each other as well as legal actions from regulators over their make the world a better place. He shouldn’t be too hard on
borrowing and lending partnership. himself: Perhaps blowing up the Wild West era of crypto was
Which raises the question: What could be so bright about the most effective altruism he could’ve ever performed. <BW>
 Bloomberg Businessweek November 13, 2023

B Pharma Tries AI to Boost

Equality in Drug Trials
U ● Study participants are The industry could certainly use some. A recent

S
analysis in Health Affairs found that fewer than 20%
overwhelmingly White, even of drugs approved in 2020 had data on treatment
though medicines’ efficacy can benefits or side effects for Black patients. Financially
and socially, the lack of diversity in trials will cost
vary by race and ethnicity

I
the US “billions of dollars” over the next three
decades, according to a 2022 report by the National
Academies of Sciences, Engineering and Medicine,
Black Americans are twice as likely as their White which pointed to factors such as premature deaths

N
counterparts to develop multiple myeloma, but and a lack of effective medical intervention. The
their participation rate in clinical trials of treatments report also said trials that aren’t inclusive hinder
for the bone marrow cancer is a dismal 4.8%. Now innovation, fail because of low enrollment rates and
drug giant Johnson & Johnson says it’s had success worsen health disparities.

E
increasing that share by using an untraditional tool: About 75% of participants in clinical trials for new
artificial intelligence. drugs approved in 2020 were White, 11% Hispanic
Algorithms helped J&J pinpoint community cen- and 8% Black. But research shows people can react
8 ters where Black patients with this cancer might differently to medicines depending on their race,

S
seek treatment. That information helped lift the ethnicity, age, gender and sex. Researchers have
Black enrollment rate in five ongoing studies to said since the 1980s that White patients have a bet-
about 10%, the company says. Prominent academic ter response to a type of antihypertensive drug
centers or clinics that have traditionally done trials called beta blockers and a widely used class of med-

S
are often not easily accessible by minority or low- icines for cardiovascular disease called ACE inhibi-
income patients because of distance or cost. tors than Black patients. Other studies show Asian
J&J is using AI to increase diversity in 50 trials and cancer patients treated with immune checkpoint
plans to take that number to 100 next year, says Najat inhibitors called PD-1 and PD-L1 have significantly
Khan, chief data science officer of its pharmaceuti- improved survival rates compared with non-Asians.
cal unit. One skin disease study that used cellphone Regulators increasingly want drugmakers to con-
snapshots and e-consent forms to enable patients sider such disparities when vetting new treatments.
to participate in the trial remotely managed to raise In 2014 the European Medicines Agency introduced
enrollment of people of color to about 50%, she says. guidance requiring drugmakers to justify nonrep-
“You have claims data, connected to electronic resentative clinical trials. Australia’s Therapeutic
health records data, connected to lab tests, and all Goods Administration’s 2022 guidelines say drug
BRAWLEY: JOHNS HOPKINS UNIVERSITY. ILLUSTRATION BY IBRAHIM RAYINTAKATH

of that de-identified and anonymized,” Khan says. study populations should represent the makeup of
“The machine-learning algorithm computes and cre- the broad population. And the US will soon require
ates a heat map for you as to where the patients eli- diversity action plans for clinical trials submit-
gible for that trial are.” ted to the Food and Drug Administration, a provi-
In recent decades, evidence has been growing sion included in the 2023 government spending bill
that medicines don’t affect all people the same way. enacted last December.
And the Covid-19 pandemic highlighted deep eth- Clinical trials are hard to run because they involve
nic disparities in access to health care. In response, coordinating with multiple parties: patients, hospi-
regulators and advocacy groups have been pressur- tals, contract research companies. So pharma com-
ing drugmakers to include underrepresented racial panies often have simply relied on well-established
and ethnic groups in new treatment trials, not only academic medical centers, where populations may
to improve biomedical knowledge but also to build not be as diverse. But computer algorithms can
Edited by
trust in medical systems among minority groups. quickly review vast troves of data on past medical
James E. Ellis Many companies are turning to AI for help. studies, search through zillions of patient medical
 9

records from around the world and quickly assess services company, which health centers across the
the distribution of disease in a population. That country used to predict which patients needed
data helps drugmakers find doctors and clinics with high-risk care. The algorithm based its predictions
access to more diverse patients who fit into their tri- on patients’ health-care spending, rather than the
als more easily—sometimes months faster and more severity or the needs of their illness. Only 18% of
cheaply than if humans were reviewing the data. Black patients ended up getting additional help,
“They [drugmakers] have to ask physicians rather than the 47% who needed it, according to a
to think about a patient when they see them and study of the algorithm’s effects at one institution that
then think about ethnicity and race—it’s just mak- was published in the journal Science. Its authors say
ing a difficult task even more difficult,” says Wout that skew is typical of risk prediction tools that med-
Brusselaers, founder of Deep 6 AI, which sells AI ical centers and government agencies use to service
software that matches patients and trials. 200 million people nationwide, and that such bias
AI poses new challenges for drugmakers, though, likely operates in other software as well.
because the technology carries the risk of making Optum, a unit of UnitedHealth Group Inc., says
things worse than they already are by introducing the rules-based algorithm is not racially biased. “The
what’s known as algorithmic bias. study in question mischaracterized a cost prediction
In 2019, for instance, academics said they algorithm used in a clinical analytics tool based on ● Dr. Otis Brawley
uncovered unintentional racial bias in one soft- one health system’s incorrect use of it, which was
ware product sold by Optum Inc., a major health inconsistent with any recommended use of the
 ◼ BUSINESS Bloomberg Businessweek November 13, 2023

tool,” the company said in a response to questions.

The FDA is considering drafting recommenda- B-Schools’ Latest Case
tions for companies submitting AI applications for
drug development to ensure their models don’t inad- Study: Fewer Applicants
vertently discriminate against underserved patients.
“Additional regulatory clarity may be needed in the
future, especially as we see the emergence of new AI ● Top MBA programs such as Harvard, Yale and Stanford are seeing
technologies,” says Tala Fakhouri, associate director big declines, especially from American students
for policy analysis at the FDA. Such regulatory clar-
ity would “take into consideration algorithmic bias.”
Some critics point out other problems. Running In the summer of 2022, as she began her work
trials remotely or providing transportation or park- recruiting the class of 2025 at Georgetown
ing vouchers for participants would draw more University’s McDonough School of Business, Shelly
minorities into trials than using AI, says Dr. Otis Heinrich was optimistic. The previous cycle had
Brawley, a professor of oncology at Johns Hopkins been disappointing—applications had been down. ▼ Change in business
school applications,
University. Black populations in the US are dispro- “It was the first full summer where I felt we are past 2017-23
portionately poor, and the hospitals looking after the Covid restrictions and started to think things ● Seven-year low
them often don’t have the bandwidth for extra proj- were going to kind of get back to normal,” recalls in number of
applications
ects such as clinical trials, he says. Heinrich, an associate dean overseeing the school’s
Rochester (Simon) 92%
“AI could do that, but I could do it, too, as long as MBA admissions.
Georgia Tech
I were allowed to pay for people’s parking—as long as They didn’t. McDonough and many other com- (Scheller) 59%
I did it in resourced, wealthy places,” says Brawley, petitive schools admit students in rounds, and the USC (Marshall) 58%
who earlier worked at Grady Memorial Hospital in conventional wisdom is to apply early. But in the Cornell (Johnson) 55%
Atlanta, where he didn’t have resources to run clini- first round that fall, applications from Americans Vanderbilt (Owen) 50%
cal trials. Even at Johns Hopkins, he loses minorities were way down. By the time Round Four closed in Rice (Jones) 45%
10 more than Whites because of parking costs, he says. May, Georgetown had received 7% fewer applica- Virginia (Darden) 2%
Walgreens Boots Alliance Inc.—which began run- tions than in the previous cycle, which itself was Columbia* 0%
ning clinical trials for drugmakers in 2022—uses AI down 5% from the cycle before that. Carnegie Mellon
tools to locate eligible patients from diverse groups Georgetown wasn’t alone. Data Bloomberg (Tepper) -1%

*PERCENTAGE CHANGES AT COLUMBIA AND HAAS ARE THROUGH 2022. MIT SLOAN’S 2023 APPLICATIONS INCLUDE AN EARLY ADMISSIONS PROGRAM
quickly, but relies on local pharmacists at its almost Businessweek collected from highly ranked business Pennsylvania
(Wharton) -7%
9,000 US stores to recruit people from underrepre- schools in our survey indicates that applications
● MIT (Sloan)* -8%
sented groups, says Ramita Tandon, who heads the to full-time MBA programs at most of those institu-
Chicago (Booth) -10%
chain’s clinical trial business. “We have posters, fly- tions have been falling since at least 2017, despite
Northwestern
ers,” with information about trials, she says, or sim- two good years during the pandemic. Eighteen of (Kellogg) -12%
ply “pharmacists that are having the dialogue with the top 26 programs have seen long-term appli- Duke (Fuqua) -13%
the patients when they pick up their scripts.” cation declines, which for most of them contin- Michigan (Ross) -15%
This method helped improve participation of ued into 2023. (At press time, Columbia Business Georgetown
Black patients in one cardiovascular study to 15%, School had yet to publish data for its class of 2025. (McDonough) -18%
Tandon says. The new FDA diversity requirements Berkeley’s Haas School of Business declined to pro- ● Emory
(Goizueta) -19%
have generated lots of interest from large drug com- vide application figures for the class.)
WHERE STUDENTS DEFER ENROLLMENT FOR TWO TO FIVE YEARS. DATA: BLOOMBERG

● Washington
panies in Walgreens’ clinical trials business, she says. “Yale was practically begging people to apply,” (Foster) -20%
New York-based H1, which uses generative AI to says Barbara Coward, a B-school admissions con- ● Harvard -21%
help match drugmakers with trial sites, is working sultant. As spring 2023 approached, Coward says, ● NYU (Stern) -22%
to remove bias from data it collects. For example, “Yale and other schools were sending messaging, Berkeley (Haas)* -23%
its data on race and ethnicity can be derived from emails and blogs that I’ve never seen before, say- Dartmouth (Tuck) -23%
credit card and bank statements, which means it ing, ‘What you’ve heard about applying in Round ● Stanford -24%
might not be capturing people who are less well off Three is not true!’ ” Yale -25%
financially, says Chief Executive Officer Ariel Katz. Yale Dean Bruce DelMonico told Businessweek by ● Texas at Austin
“We are doing a lot of work to make sure that we feel email that the school anticipated more third-round (McCombs) -27%
like our data sets are comprehensive, not biased, but applications than usual and adjusted admittances UCLA (Anderson) -34%
there’s more work to do there,” he says. �Nacha accordingly. “Our selectivity was as low if not lower
Cattan and Kanoko Matsuyama than most years in Round 3,” he said. Still, applica-
tions to the School of Management were down by
THE BOTTOM LINE About 75% of participants in clinical trials for
new drugs approved in 2020 were White, while only 8% were Black.
about 5% this year and a quarter since 2017.
That skew risks missing medicines’ differing effects by race. Elite programs seem to have fared worse
 Designed in California
Assembled in the United States
Engineered for a better world
This is the Lucid Air, the longest range electric car on the market.*
Experience the new standard in sustainable luxury.

LUCIDMOTORS.COM
*EPA est. range ratings when equipped with 19” wheels: 516 Grand Touring/425 Touring. Manufacturer’s projected range
for Pure equipped with 19” wheels is 410 miles; EPA est. range is 419. Actual results will vary.
 ◼ BUSINESS Bloomberg Businessweek November 13, 2023

than the broader cohort of American full-time according to Peter Johnson, director of the full-time
MBA programs. A new survey of application trends MBA program at Haas until 2022. But because
from the Graduate Management Admission Council those schools are chasing more of the same stu-
found that slightly more US programs saw applica- dents, “actually enrolling those people becomes
tions increase over last year than saw decreases. a lot tougher,” says Johnson, now a consultant at
Worldwide, according to the survey, top-100 pro- Fortuna Admissions. “You also see more candidates
grams were more likely to see applications dip negotiating for scholarships” and finding other
in 2023 than poorly ranked or unranked programs. ways to use their leverage. All that filters down to
If the trend continues, middle- and upper-middle- the tier directly below. While all of the top eight
ranked programs—particularly those at schools schools in Businessweek’s rankings increased their
without large endowments to fund operations— classes in the last six years, if only slightly, 15 of the
could find themselves getting squeezed. next 18 reduced theirs. �Robb Mandelbaum
Not everybody is souring on an American MBA—
THE BOTTOM LINE The number of Americans applying to top
just Americans. While 85% of full-time, two-year B-schools is falling, creating opportunities for more international
MBA programs saw fewer domestic applications students to win slots. Still, schools say their selectivity is holding up.
in 2022 than in 2021, according to last year’s GMAC
survey, 80% of those programs saw more applica-
tions from international students. That dynamic
moderated but continued in 2023. Most schools
don’t publicly break down how many applicants
are foreign citizens; six schools did share these fig-
ures with Businessweek. All six reported that inter-
Marvel Is Suffering
national applicants for the class of 2025 amounted
to 60% to 90% of the total.
Although even these schools were more likely
From Superhero
12 to admit a US applicant than one from abroad, the
shortfall in domestic interest has created openings
for foreign students at most top business schools.
Fatigue
Since 2019 the international share of matriculat-
ing students has grown by double digits for at least ● After 33 films and dozens of TV shows, it’s harder for the Disney
22 of the top 26 schools in Businessweek’s rank- studio to keep viewers cheering the costumed do-gooders
ing. Several programs, including the University of
Michigan’s Ross School of Business, have pursued
an official STEM designation that allows foreign On Nov. 10, Marvel will release the 33rd film in its
students to work in the US for up to three years Marvel Cinematic Universe (MCU), The Marvels—a
after graduating. cocktail of intergalactic combat, superhuman
Admissions officers and school deans chalk up powers and man-eating kittens with tentacles for
the applications slump in part to the strong US tongues. It’s the sequel to Captain Marvel, the 2019
economy, even through the pandemic. “Students picture starring Brie Larson that made more than
of MBA age that may have been laid off in 2020 $1 billion at the box office. But The Marvels, which
regained employment in 2021, and they’re going cost more than $200 million to produce and mil-
to want to stick with those jobs for a few years,” lions more to market, is already looking challenged.
says Georgetown’s Heinrich. The recent effects of Opening weekend is expected to pull in less than
the tech sector shedding jobs and the seemingly half the $153 million in ticket sales Captain Marvel
cooling economy didn’t reach campus in time did in its debut, raising existential questions about
for fall classes. “There’s a lag effect,” says Greg the future of the Marvel franchise.
Hanifee, associate dean for degree programs at Shawn Robbins, an analyst at industry tracker
Northwestern’s Kellogg School of Management. “It Boxoffice Pro, says Marvel “is, quite simply, miles
sometimes takes up to a year for some applicants away from the zeitgeist-capturing interest and enor-
to get into the right headspace.” mous goodwill that for a time helped every film
Faced with declining interest, MBA program achieve automatic blockbuster status.”
managers have had to balance reaching deeper Walt Disney Co. acquired Marvel in 2009
into the applicant pool to maintain class size for $4 billion, gaining some of the world’s best-
against degrading the quality of the class. For the known comic book superheroes, including Iron
most selective schools, that’s not really an issue, Man, Captain America and the Hulk. The deal,
 ◼ BUSINESS Bloomberg Businessweek November 13, 2023

31 days and
How Marvel Flooded
oo
ode 50 minutes

The Hero Zone

e
Cumulative minutes of Marvel programming, Phineas and Ferb
Mission Marvel
from Disney’s 2009 announced acquisition to present
40k
◼ Live-action movies
◼ Live-action shorts and TV specials
◼ Live-action TV series
◼ Unscripted shows
◼ Animated movies and specials
◼ Animated shows and shorts
There have been three
animated Spider-Man Avengers
Guardians Assemble
television series since 2009
of the
Galaxy

30

Black Panther
Ultimate
Avengers: Endgame Spider-Man
was Marvel’s
highest-grossing film Loki
at the box office
14

20
The Punisher

Iron Fist

Luke Cage

There are 101 hours of Agents of

SHIELD available to watch Jessica Jones

Stan Lee’s Daredevil

Superhumans

10

Earth’s Mightiest
Heroes! The
Avengers

Iron Man 2
The Superhero Agents of SHIELD
Squad Show

Q1 ’10 Q1 ’12 Q1 ’14 Q1 ’16 Q1 ’18 Q1 ’20 Q1 ’22 Q4 ’23

MARVEL (8)

AS OF 11/3
US release date
CHART SHOWS MARVEL CONTENT CURRENTLY AVAILABLE ON DISNEY+. TV SERIES’ MINUTES ADDED AT THE DATE EACH SEASON BEGAN. DATA: DISNEY+, IMDB
◼ BUSINESS Bloomberg Businessweek November 13, 2023

masterminded by Disney Chief Executive Officer similar test with moviegoers showing more interest
Bob Iger, is considered one of the savviest pur- in fresh, nonsequel fare such as Greta Gerwig’s
chases in media history. Under the leadership of Barbie and Christopher Nolan’s Oppenheimer.
Kevin Feige, arguably the most successful producer Disney declined to make Feige or any mem-
in Hollywood, films in the MCU—which began in ber of the Marvel team available for an inter-
2008 with the release of Iron Man—have generated view to discuss strategy. But in March at a Morgan
close to $30 billion at the box office, making it the Stanley investment conference, on the heels of
highest-grossing movie series ever. Quantumania’s disappointing performance, Iger
Their success, powered in large part by inter- said that “there’s nothing in any way inherently
twining storylines in films based on Avengers char- off in terms of the Marvel brand. I think we just
acters such as Doctor Strange and Thor, inspired have to look at what characters and stories we’re
Disney to develop scores of affiliated rides, cam- mining, and when you look at the trajectory of
puses and even a mock Broadway musical at its Marvel over the next five years, you’ll see a lot of
theme parks. Marvel adopted an Old Hollywood newness.” Still, in an interview with CNBC in July,
studio tactic of bringing writers and producers he conceded that the soaring number of Marvel
in-house and committing actors to several movies. movies and TV shows, which he had encouraged
But Marvel, once the thoroughbred in Disney’s as a means to drive and retain sign-ups to Disney+,
intellectual-property stable, is showing signs of “diluted focus and attention.” (Marvel released one
fatigue after besieging audiences with too many to two films a year in the late 2000s and early 2010s.
sequels and spinoffs. The February release Ant- It’s released 10 in the past two years alone.)
Man and the Wasp: Quantumania, which cost more ◀ Larson in the
latest MCU sequel
than $200 million to make, failed to break even
after selling far fewer tickets than previous install-
ments, leading Iger to question the need for any
sequels of a film about a single character.
Meanwhile, some of the TV programs made for 15
the Disney+ streaming service, including She-Hulk:
Attorney at Law and Secret Invasion, have struggled
to connect with audiences and convinced Marvel
management it needs a new team of experienced
showrunners to develop its series.
Some critics and fans have panned the quality of
the computer graphics in recent Marvel shows and Marvel is planning to release three pictures in
pictures such as She-Hulk and Quantumania and 2024, though none of them is based on characters
see it as evidence of strain overwhelming the pro- that haven’t already appeared in the MCU. The
duction process. And in September, Marvel’s visual newness Iger is seeking from the superhero divi-
effects artists, who’ve long complained of burnout sion will instead come from titles such as Blade in
due to an onslaught of projects bound for cinemas 2025, the reboot of a Marvel franchise about a vam-
and Disney+, unanimously voted to unionize, seek- pire hunter last seen in the early 2000s. Marvel is
ing better working conditions. also developing new X-Men films for the first time
“I think CG’s f----- everything because you feel since Disney gained the rights to make pictures
like you’re watching a video game,” said Matthew based on the characters as part of its $71.3 billion
Vaughn, who’s directed 20th Century Studios mov- takeover of 21st Century Fox in 2019.
ies based on Marvel comics X-Men and Kingsman, at One thing seems certain: The future of the fran-
New York Comic Con in October. “Hopefully, Feige chise won’t be as free-spending as its past. Iger has
will go back to less-is-more and make less films and pledged to make less Marvel product and to spend
concentrate on making them great.” less on the films the studio does make. That’s a
The need to return Marvel to past form has big shift. Box-office analysts estimate the 2018 and
become more urgent with the waning success of 2019 pictures Avengers: Infinity War and Avengers:
other Disney studios. New releases from prized Endgame cost as much as $400 million each. Such
Disney franchises including Pixar’s Toy Story and spending has made profitability more of a challenge
Lucasfilm’s Indiana Jones, as well as new animation for Disney’s superhero releases. �Thomas Buckley
titles, have bombed in theaters during the past two
THE BOTTOM LINE Viewers are tiring of superhero films. That’s
years. But where Marvel has historically been able bad news for Disney’s Marvel unit, which has reaped billions at the
to pick up that slack, its own brand is now facing a box office from its huge interconnected universe of characters.
 Bloomberg Businessweek November 13, 2023

Innovation Triangulating the

T
E
C
H ● Startup JetZero is designing
an airliner it says can cut fuel
The basic concept dates back more than a
century, when Germany’s Hugo Junkers pat-
ented a flying wing after realizing the fuselage
consumption in half
N and tail fin were just ballast that provided no lift.
16 During World War II, the Luftwaffe built a few
prototypes of a similarly shaped plane called the
Over a century of commercial aviation, from the Horten Ho 229, but it never reached serial pro-

O Ford Trimotor in the 1920s to today’s Boeing Co. duction. And the Pentagon has been flying the B-2
and Airbus SE jetliners, there’s been one constant: stealth bomber since 1997 and is preparing tests of
Airplanes are virtually always long tubes sport- a successor, the B-21.
ing wings with engines bolted on underneath Both Boeing and Airbus have studied futuristic

L
and a tail stabilizer at the back. Inside there’s concepts that nestle the cabin into the wing, but
a similarly standard layout—one or two aisles neither is in any hurry to introduce one. JetZero
flanked by rows of seats, notwithstanding occa- says it will begin test flights of a one-eighth-scale
sional extravagances such as staircases or bars for prototype in December, and it aims to build a full-

O
premium-class passengers. scale version within four years. The reaction of
Startup JetZero Inc. is taking aim at that design the industry leaders “was ‘Not now,’ ” says Chief
with a radical proposition: a triangle-shaped air- Executive Officer Tom O’Leary, a former Tesla
craft resembling a giant manta ray in the sky, Inc. sales executive and veteran of electric air taxi

G
boasting a shorter fuselage that’s wide enough to startup Beta Technologies. “Our reaction is ‘Now is
contribute to the lift needed to keep the thing air- the time.’ And we’re happy to pave the way.”
borne. Gone is the tail, with two engines piggy- Airbus and Boeing have dominated the airliner
backed onto the rear taking its place to provide market for decades, and breaking their duopoly

Y
both power and stability. is no small task. A few players such as Brazil’s
JetZero says its design has several advantages Embraer SA have carved out niches with smaller
over traditional aircraft: It’s quieter, it’s more sta- models, but even Embraer employs a lot more
ble, and it uses interior space more efficiently, people than JetZero’s 75. China has sought to
with a triangular cabin that has three aisles to break in with its Comac C919, and Russia has tried
ease bottlenecks during boarding. It’s also lighter, the same with the Sukhoi Superjet, but neither
requiring engines no bigger than those on today’s has yet caught on. And after Bombardier Inc. was
single-aisle models. The startup says its so-called nearly bankrupted by the C-Series, a smaller alter-
COURTESY JETZERO

blended-wing aircraft could haul as many as native to the duopoly’s single-aisle workhorses,
Edited by
Joshua Brustein
250 people—the capacity of a widebody jet such as the Canadian company in 2017 handed it over to
and David Rocks Boeing’s 767—while burning half the fuel. Airbus for $1.
◼ TECHNOLOGY Bloomberg Businessweek November 13, 2023

New Shape of Air Travel

Part of the difficulty stems from complex WhiteKnightTwo, a plane that takes paying ▲ Rendering of a
JetZero blended-wing
regulations that require as much as a decade for a customers into the stratosphere. Among big aircraft
plane to be certified, forcing companies to absorb defense contractors, “Northrop Grumman is the
steep development costs while booking little or most forward-looking, and I think the most open
no sales. That’s on top of the billions of dollars to new ideas,” says Richard Aboulafia, managing 17
needed for assembly lines and a global constella- director of consulting firm AeroDynamic Advisory.
tion of suppliers. And airlines have grown accus- “It seems a natural fit.”
tomed to the simplicity of having just two primary The US Air Force has pledged $235 million to
vendors, which keeps a lid on training and main- fast-track the effort. If all goes to plan, JetZero will
tenance expenses. begin working with regulators to certify a midsize
But like the auto industry, aviation is poised for airliner by the early 2030s. That passenger model
radical change as airlines and manufacturers aim could be followed by military cargo-hauling and
for carbon neutrality by 2050. The industry is abuzz aerial-refueling versions, ultimately replacing a
with entrants seeking to redefine commercial flight, Boeing tanker in the Air Force lineup. Pentagon
with startups such as Archer Aviation, Joby Aviation leaders, eager for technology that would give the
and Lilium introducing air taxis, small electric air- US an edge over China, see the low noise profile
craft that are in trials. and increased range of JetZero’s concept reap-
Airbus is experimenting with hydrogen propul- ing rewards in battle. “There’s no time to waste,”
sion that might someday power a blended-wing jet. Air Force Assistant Secretary Ravi Chaudhary
More than a decade ago, Boeing and NASA tested said in announcing the support for the company
a scaled-down blended-wing prototype known as in August.
the X-48, but it never advanced to the commercial There are plenty of potential roadblocks.
stage—and the engineers who led that effort now Government backing, Aboulafia reckons, will cover
work at JetZero. What’s more, Airbus and Boeing only about half the costs of the bigger prototype,
have signaled they don’t plan to introduce any all- so O’Leary’s team must find investors to make up
new jetliners before the mid-to-late 2030s. Instead the difference. And persuading airlines and the fly-
they’re planning far less costly tweaks, such as add- ing public to buck the status quo won’t be easy.
ing new engines to existing models. “We’re enter- JetZero’s unconventional cabin layout may not be
ing a place in the market where there’s superhigh to passengers’ taste, and airport infrastructure
demand and zero supply,” O’Leary says. such as gangways and loading equipment are laid
JetZero has signed up powerful partners. It out to accommodate tubular aircraft.
will get help designing and building its proto- O’Leary acknowledges that the industry is con-
type from Northrop Grumman Corp., the maker servative and resists change, but he insists that
of the B-2 and Virgin Galactic’s twin-hulled once airlines and passengers see his plane in the
 ◼ TECHNOLOGY Bloomberg Businessweek November 13, 2023

air and understand the benefits of its radical as Zoom. Jarek Kutylowski, its founder and chief
design, they’ll quickly change their minds. The executive officer, says he imagines such a transla-
concept “has been tested on a scaled level, and tor living “within each and every business meet-
yet it’s not been built,” he says. “They need to see ing,” making language barriers irrelevant.
it at full scale, proving that there is this incredi- Unlike its sprawling competitors, DeepL is solely
ble reduction in fuel burn and emissions that can focused on machine translation. As AI spreads
come from this airframe. To us, that’s everything.” across businesses, it’s uncertain whether a few
�Julie Johnsson general-use models will dominate the market, or if
many organizations will flourish offering tools that
THE BOTTOM LINE With $235 million in Pentagon support, JetZero
aims to build a prototype by 2027 and a passenger model by the
excel at specific tasks. DeepL’s continued success
early 2030s, paving the way for military versions. would point to the latter possibility.
The startup, which began operating through a
bare-bones website in 2017, now covers 31 languages
and sells a paid version to more than 20,000 clients,
including law firms and consulting companies, many
How Do You Say ‘AI’ of them in Asia. DeepL says “tens of millions” of peo-
ple use its service every month, and it plans to open
in German? its first US office in January. Ajay Vashee, a partner
with IVP, a venture capital firm that’s invested in
DeepL, compares the startup to Dropbox and Slack,
● A Cologne-based startup punches above its other household names in the software industry that
weight in the race to build a universal translator his firm has invested in.
Intento Inc., which tracks machine transla-
tion, recently ranked DeepL with Google and ▼ Kutylowski at DeepL’s
Techies have been promising for years to make a Amazon.com Inc. for best overall offerings and offices in Cologne

18 real-life version of a universal translator—the gad-

get that appears in myriad sci-fi books, movies and
TV shows, allowing characters to understand one
another regardless of the language they’re speak-
ing. Rapid advances in artificial intelligence, which
grabbed the public imagination with the 2022 intro-
duction of ChatGPT, have made that imagined real-
ity actually seem within reach.
One logical candidate to offer such a transla-
tor is Alphabet Inc.’s Google, whose Translate ser-
vice already handles more than 130 languages.
Last year, Google showed a video featuring eye-
glasses that could display subtitled translations in
real time. (The actual glasses have yet to arrive.)
There’s also OpenAI, the maker of ChatGPT, which
users have been employing to translate multipara-
graph passages. Spotify Technology SA recently
disclosed plans to use OpenAI’s tech to translate
popular podcasts into other languages, read by
AI-rendered clones of their popular hosts’ voices.
A less prominent candidate, but one that indus-
try insiders have been tracking for years, is the
700-person startup DeepL SE in Cologne, Germany.
KAYLA KAUFFMAN & FELIX VON DER OSTEN

This January it raised funds at a €1 billion ($1.1 bil-

lion) valuation. In December the company plans to
introduce its first voice interpreter, a feature that
automatically captures a speaker’s words, then
translates and transcribes them into text in another
language. Eventually, DeepL plans to bring this fea-
ture to its own app, as well as to other services such
◼ TECHNOLOGY Bloomberg Businessweek November 13, 2023

placed DeepL higher in some sectors such as

education, health care and finance. A recent aca-
demic study showed DeepL made fewer errors
than Google Translate when going from English
Tomorrow’s Fuel
to Polish, though DeepL has also been found to
have more trouble than ChatGPT in maintain-
ing the gender of words during translations. An
Needs Oilier Beans
Amazon representative declined to comment, and
Google and OpenAI didn’t respond. ● Genetically modified soybeans could help lower
The most advanced translation software today emissions from jets and trucks
relies on neural networks, which are better than
previous technologies at producing translations
that accurately place words and phrases in context, To reduce the carbon emissions from passenger
says Eva Vanmassenhove, an assistant professor at jets and long-haul trucks, a vast volume of soy-
Tilburg University in the Netherlands, who stud- based renewable fuel will be needed. To produce it,
ies the topic. As an example she offers the word American farmers could rip up existing cornfields
“bank,” which could be a financial institution or the to clear space, plant millions of additional acres of
earth beside a river; a sophisticated translation sys- soybeans and halt all soybean exports.
tem needs to be able to choose the definition based Or someone could make a better bean.
on how it’s being used. Researchers at startups and biotech giants alike are
Kutylowski describes DeepL’s tech as a “con- exploring ways to formulate a new kind of legume
textual engine,” which works by absorbing entire through selective breeding or genetic modification
paragraphs of text at once. He says DeepL is using that generates more oil per bushel.
OpenAI tech for some experiments while also devel- One of the startups, ZeaKal Inc., funded in part
oping its own large language model. DeepL’s system by seed giant Corteva Inc., plans to introduce its
is a “grade smaller” than more general-use models, first batch of high-oil seeds for commercial plant- 19
Kutylowski says, but also more efficient, because ing in 2024. Scientists have tricked the plant into
it’s tailor-made for translation. The company uses sustaining photosynthesis for longer with genetic
special web crawlers it’s built to locate translations modification, ultimately producing more oil as “That is found
online and assess quality, according to a description well as more protein. Oil makes up as much as oil. … You’re
on its website. It also pays thousands of contractors 23% of the altered seeds, which is higher than the handling less
to offer human feedback to train its models. 20% average for conventional seeds. Future vari- volume, you’re
Beyond this description, Kutylowski doesn’t pro- eties might have even more, the San Diego-based transporting
vide many specifics, citing intellectual property startup says. fewer beans”
concerns. This is common among tech companies, If the modified beans were planted on the
Vanmassenhove says. “It’s always difficult to know roughly 80 million acres cultivated with soybeans
what’s going on and how they compare,” she says. in the US, it would eliminate the need for an addi-
She cautions that existing research is still fairly thin tional 13 million acres of oilseeds to meet the coun-
and that the technical methods from companies try’s soaring demand for renewable fuel, ZeaKal
are constantly shifting. “I don’t dare to make any says. “That is found oil,” says Chief Executive
claims about DeepL being any better,” she adds. Officer Han Chen. “If you imagine processing the
Forecasters project the global market for transla- same soybean but getting out 13% or 15% more oil
tion services will top $44 billion in the next decade, for that bean, you’re handling less volume, you’re
with the market likely driven in part by multinational transporting fewer beans. The productivity and the
corporations and institutions looking for cheaper ESG [environmental, social and governance] bene-
options than human translation. To win such busi- fits from knowing that you’re going to get more out
ness, Kutylowski knows he may have to outperform of less, that’s what’s really driving it.”
Google Translate, and he’s confident that his com- For decades seed developers exploring genetic
pany is already proving it can do just that. “We’ve modifications have been primarily focused on
shown that, with a lot of focus and determination, boosting crop yields by making plants toler-
we can keep up even with a competitor that is big- ant to potent weed killers, bugs or droughts.
ger,” he says. �Mark Bergen and Aggi Cantrill Manipulating the total oil content was never on
the table in a meaningful way. But this June, for
THE BOTTOM LINE DeepL’s success in translation points to the
chance for AI tools tailor-made for specific purposes to compete
the first time ever, the amount of US soy oil used
with the most prominent general-purpose models. for biofuel production in a single month surpassed
 ◼ TECHNOLOGY Bloomberg Businessweek November 13, 2023

◀ ZeaKal PhotoSeed
seedlings

the amount used for food and other domestic modified organisms take years to develop and gain
uses, according to US government data. full regulatory approval. Farmers may be reluc-
Renewable diesel, a biofuel that’s chemically tant to become early adopters of a technology that
equivalent to petroleum-based fuel, is often touted hasn’t yet proven its benefits, especially if the oil
as one of the best ways to cut emissions from the content comes at the expense of existing genetic
hard-to-electrify heavy transportation sector. modifications that improve disease or pest resis-
Companies are racing to build more capacity to tance. ZeaKal’s new PhotoSeed beans will not ini-
process soy, a critical component for expanding tially have those modifications.
green fuel supplies. All four of the so-called ABCD There’s also the question of what buyers will
group of major crop merchants—Archer-Daniels- be willing to pay. As a commodity, oilseeds are
Midland, Bunge, Cargill and Louis Dreyfus—have generally traded globally based on weight and
20 opened facilities, or announced plans to build or location, with little space to segregate out beans
expand them in the next few years. with unique characteristics. If fuelmakers such
Tax credits available under the Inflation as Exxon Mobil Corp. or Chevron Corp. want the
Reduction Act provide companies in the transpor- more productive beans, suppliers hope they’ll
tation industry with a financial incentive to switch eventually break out of a commodity-based
to fuels with lower carbon intensity. S&P Global model. There’s been some sign of that happen- ▼ US soybean oil by
domestic use, in pounds
sees domestic demand for renewable diesel reach- ing with high-oleic soybeans, a variety that’s been
Biofuel
ing 4 billion gallons in 2030, up from around 2.7 bil- modified to produce healthier oil. Trading house
Food and other
lion this year. It projects that the use of sustainable Bunge Global SA and chicken producer Perdue
aviation fuel will total 1.7 billion gallons annually by Farms Inc., for example, pay a premium to buy
the end of the decade, compared with just 182 mil- farmers’ high-oleic beans, which have lower satu- 1.3b

lion gallons a year now. rated fat levels than other cooking oils and boast
The outlook for a major increase in biofuel a longer shelf life.
demand is now “more than just an inspiration,” Perdue has signed a similar deal with ZeaKal,
says Ryan Fuller, the head of soybean strategic agreeing to pay farmers a premium for harvested 1.0

marketing for Syngenta AG, the Swiss seed and supplies of the new variety, which is good for
chemical company controlled by China National chicken feed because of its higher protein levels. If
Chemical Corp. Syngenta is poring through data large oil companies follow suit, the soybean mar-
NEETA SATAM/BLOOMBERG. DATA: US DEPARTMENT OF AGRICULTURE

collected over decades of planting and screening ket might never look the same. “We could have 0.7

in search of traits it could tap to develop variet- an opportunity for the oil component of soybeans 10/2021 7/2023
ies more fit for energy production. The company to actually become more important in some mar-
is also considering using gene-editing tools as kets than the protein aspect,” says Mike Dillon,
part of its efforts to increase soy oil content. It oilseed portfolio vice president for Corteva, the
hasn’t announced a specific plan or timeline for a agricultural chemical and seed company that
higher-oil seed. was spun off from DowDuPont in 2019. “That’s
Despite the bullish projections, the soy-based a very dramatic shift.” �Gerson Freitas Jr. and
transportation fuel market is still a drop in the Michael Hirtzer
bucket for the diesel industry. And even if the new
THE BOTTOM LINE Genetic modification or selective breeding
breed of high-oil seeds takes off, widespread adop- could transform the soy market by making the beans better inputs
tion across the US will take time. New genetically for low-carbon fuel, but the process is in the early stages.
Welcome to Now

Delivering
innovation to any
environment.
Including yours.

Dell Technologies and Intel are supporting

scientists as they tackle one of the biggest
challenges in conservation—protecting
the coral reef. We are also helping small
businesses everywhere manage their
challenges, big and small. With the power to
collect critical data, reduce IT complexities
and keep systems secure, technology
is helping businesses protect many
environments. See what we can do for yours.

Explore more at
Dell.com/WelcomeToNow

Intel® Innovation Built-in

 Bloomberg Businessweek November 13, 2023

F
I
N
A
N
22
C
E ILLUSTRATION BY QIANHUI YU. *INCLUDES FAMILY OFFICES. DATA: BAIN ANALYSIS, PREQIN, GLOBALDATA

Private Equity
Opens the Door
To Main Street
Edited by
David Rocks
◼ FINANCE Bloomberg Businessweek November 13, 2023

● The industry is racing increasing that share even modestly could translate ▼ Share of investors’
global wealth in
to tens of billions of dollars for cash-hungry firms.
to secure a share of the But such investors can be more skittish than the
alternative assets
in 2022

wealth held by so-called financial giants, typically wanting the ability to cash INSTITUTIONAL

mini-millionaires out in the event of doctor bills, divorces or disasters, INVESTORS

and they have a reputation in the industry for reneg- Endowments and
ing on their commitments. One attorney, who asked foundations
In September dozens of financial advisers from not to be identified discussing confidential informa-
across the US converged on an upscale Greek tion, says he’s seen as many defaults from individ- 54%
restaurant in Midtown Manhattan for cocktails and uals on pledges to funds in the past two years as he
dinner. The venue, Avra Madison Estiatorio, gets saw in 15 years working with institutional investors.
rave reviews for its first-class service and grilled These clients typically know little about alter- Public pension funds
branzino, but the main attraction that evening native investments, and advisers say they have
25
was tennis legend John McEnroe. The following to remind them that private equity can lock up
day, after presentations on alternatives to stocks their money for years. The industry has created
and bonds, the crowd proceeded to Arthur Ashe a somewhat more flexible category called semi-
Stadium in Queens to watch a US Open quarter- liquid funds, which permit investors to cash out Sovereign wealth funds
final, where then-world No. 1 Carlos Alcaraz part of their holdings each quarter or month. But
defeated Germany’s Alexander Zverev. these generally allow firms to throttle redemptions 25

The event was put on by investment giant if they’re flooded by withdrawal requests. “There’s
Ares Management Corp., one of a growing group no magical liquidity for less-liquid assets,” says
of private equity firms courting the people who David Levi, head of the wealth business at invest- Corporate/
control the purse strings of everyday millionaires— ment firm Brookfield Asset Management. private pension
doctors, attorneys and other affluent-but-not- The industry’s pitch is that by forgoing liquidity, 11
quite-1% folks whose combined wealth stands at investors stand to get better returns over the long
about $100 trillion globally, according to consult- haul, with Blackstone Inc. saying its flagship real 23
ing firm Bain & Co. estate fund for individuals has delivered about four
Private equity has long sought to attract clients times the returns of public real estate investment Insurance
with as little as $5 million in investable assets. For trusts since its launch. But Jeffrey Hooke, a senior 7
the biggest names in the field—the likes of Apollo, lecturer at Johns Hopkins Carey Business School,
Ares, Blackstone and KKR—the next prize is those says that private equity frequently underperforms
with $1 million to $5 million, a segment of US house- public markets and that most individuals would
holds that jumped almost 60%, to 12.7 million, fare better in an S&P 500 index fund. “The returns INDIVIDUAL
in the 15 years to 2022, according to researcher that are generated are often opaque,” Hooke says. INVESTORS

CEG Insights. The race for these so-called mini- “It’s hard to figure out whether the individual fund Individuals with more
millionaires has intensified in the past year as beats the market.” than $30m*
institutional investors such as pension funds and A shift toward individual investors will expose 19%
endowments, often overallocated to private equity, the industry to greater scrutiny, and there’s a host of
have loosened their embrace of the firms amid regulations around how managers can build offer-
rising rates and economic uncertainty. ings for such mini-millionaires. Rules limit every-
Companies across the industry are offering con- thing from how many investors can be in a fund $5m to $30m
ferences, parties and steak dinners to boost their to whether a manager can take carried interest— 3
profile among individual investors. And some effectively a cut of the profits from an investment.
have created learning platforms with names like And they must closely watch the language they use
“Apollo Academy” and “Blackstone University”— in promotions and restrict marketing of their funds
which grant credits toward professional designa- to specific categories of investors, with different $1m to $5m
tions such as certified financial planner—aimed at guidelines for various levels of holdings. 1
schooling financial advisers on the business while, Blackstone, the world’s leading alternative
of course, highlighting the benefits of such invest- asset manager, arrived early to the race, start-
ments. “Not a week goes by that we don’t hear a ing a group to market funds to wealthy individ-
pitch from a major player,” says Jeffery Nauta of uals in 2011. It’s become by far the biggest player, $0.1m to $1m
Henrickson Nauta Wealth Advisors in Michigan. with about 300 people in its private wealth busi-
0
Individuals with assets from $1 million to $5 mil- ness, and individuals account for a quarter of
lion dedicate only about 1% of their net worth to pri- the $1 trillion it manages. In 2017 the firm intro-
vate equity and similar investments, Bain says, and duced the Blackstone Real Estate Income Trust,
 ◼ FINANCE Bloomberg Businessweek November 13, 2023

known as BREIT, a property fund that’s grown

to $66 billion, more than five times the size of its
nearest rival.
But while Blackstone is still the leader in
Subway Blues
attracting money to publicly registered, unlisted
REITs and funds that offer credit to companies, ● Transit agencies say they’re considering drastic service cuts as
it’s facing an increasingly crowded field. With federal grant programs draw to a close
Apollo Global Management Inc., Ares and more
than a dozen others expanding their offerings,
Blackstone’s share of money going into such funds In the early months of 2020, it was business as
has fallen to 47%, from 55% last year, investment usual at California’s Bay Area Rapid Transit District.
bank Robert A. Stanger & Co. reports. Trains were running more or less on time, bringing
Blackstone’s experience highlights the perils of commuters from across the region to their desks
courting individuals. When investors became jit- at companies such as Twitter, Salesforce and Uber
tery about property markets last year, they ramped Technologies, with their fares covering about 70%
up requests to pull money from the fund, spur- of the system’s operating budget.
ring curbs on redemptions for the past 12 months. But as the Covid pandemic took hold and
Blackstone says the backlog is easing; investors in companies told workers to stay home, ridership
October sought to pull $2.2 billion from the fund, plunged as much as 93%, spurring service reduc-
down 58% from a peak in January, and clients who tions and station closures. Trains were soon plas-
asked for cash back late last year have received vir- tered with instructions on social distancing, and
tually all of their money. Kevin Gannon, chief exec- while managers used the downtime for track
utive officer of Robert A. Stanger, says the pressures work, revenue all but evaporated. “In those first
faced by BREIT and a pair of rivals were “the best few months we were surprised by how deep the ▼ Powers

thing that could happen to the industry,” with funds

24 imposing redemption limits, but ultimately return-
ing money to the investors who asked for it.
As the race for individuals heats up, com-
petitors have been working to chip away at
Blackstone’s advantage. Last spring, Apollo
attended a dinner for financial advisers at the
Manhattan steakhouse Smith & Wollensky to dis-
cuss how private credit can replace bonds for
POWERS: PHOTOGRAPH BY GABRIELA HASBUN FOR BLOOMBERG BUSINESSWEEK. CLARKE: PHOTOGRAPH BY JARED SOARES FOR

investors. A few months later the firm launched

Apollo Aligned Alternatives, designed as a substi-
tute for S&P 500 index funds.
Ares, which ranks among the top five firms in
many of its offerings, is on an expansion drive
as it seeks to win a bigger share of the budding
market. In 2021 it acquired real estate investment
firm Black Creek Group, and it’s been increasing its
offerings in real estate, credit and private equity.
And like its rivals, the firm says it uses the same
investment team for its newer, consumer-focused
funds and its institutional funds, giving small inves-
tors the same level of expertise as its traditional
clients. “The winners are going to be the firms
that can offer solutions across asset classes,” says
Raj Dhanda, Ares’ global head of wealth manage-
ment. “So they can be the most efficient and have
BLOOMBERG BUSINESSWEEK

the most investment integrity.” �Allison McNeely,

Dawn Lim and Loukia Gyftopoulou

THE BOTTOM LINE Firms are courting financial advisers to reach

doctors, attorneys and other affluent-but-not-quite-1% folks, who
together hold some $100 trillion in assets.
◼ FINANCE Bloomberg Businessweek November 13, 2023

ridership drop was and how long it lasted,” says

BART General Manager Bob Powers.
Then the federal government offered a lifeline:
some $70 billion in aid to transit agencies across
the US. BART, which serves the 7 million residents
of San Francisco, Oakland and nearby communi-
ties, got $1.6 billion of that, which Powers has used
to keep the system limping along over the past
three years.
But by next summer, most agencies will see that
aid dry up. Ridership in the US has climbed from
70% of 2019 levels this spring to about 80% now,
according to the American Public Transportation
Association. While that’s far better than during the
depths of the pandemic—nationally, it bottomed
out below 20%—it still leaves systems dependent
on outside support and seeking to make up for
budget shortfalls.
From Boston to Los Angeles, transit agencies
face the prospect of fewer trains and buses, lay-
offs and reduced security. The Urban Institute, a or more. “We have a little bit of time—not a lot— ▲ Clarke

Washington think tank, says the crisis risks trig- to work with our state legislative partners,” says
gering a sort of vicious cycle: Lousy service dis- Jeremy Fine, chief financial officer of the Chicago
courages people from riding, which means less Transit Authority.
money from fares, which would spur further ser- In some places state governments have already
vice cuts. “There has not been enough attention stepped in to bridge the gap. Minnesota has 25
paid to the potential consequences of not filling introduced a sales tax increase that’s expected to
the gap,” says Yonah Freemark, a researcher at generate $450 million a year for Metro Transit in
the institute. the Twin Cities. The biggest US system, New York’s
The Washington Metropolitan Area Transit Metropolitan Transportation Authority, had pro-
Authority, which runs the Metro and buses in the jected its budget shortfall would widen to $3 billion
District of Columbia and nearby areas of Maryland in 2025. But the state government has earmarked
and Virginia—where less than half the workforce $300 million in one-time aid for the agency. And
has returned to the office—is projecting a $750 mil- in April, Governor Kathy Hochul introduced a
lion deficit for fiscal 2025. To make up the differ- 0.6% payroll tax on businesses in New York City
ence, the agency is considering cutting service by to help fund the MTA. That’s expected to bring in
two-thirds. “There is no question we have a really $5.1 billion of new revenue through 2027.
big challenge, and it’s not a one-year challenge, it is And BART is close to getting some $350 million
multiyear,” says Randy Clarke, the WMATA’s chief. in extra support from state and regional agencies to
New Jersey Transit expects a shortfall of take care of its immediate problems. But Powers says
$119 million for the 12 months from July 2024 and it’s only a temporary fix, and without permanent
more than $900 million the following year. The support the agency faces annual deficits of $289 mil-
Massachusetts Bay Transportation Authority, serv- lion through 2035. So he’s working up an emergency
ing Boston and its suburbs, is anticipating a defi- plan that might include reduced train frequency,
cit of $139 million in fiscal 2025 and $475 million eliminating some direct connections between sta-
the next year. tions and possibly even permanently closing stations
The Chicago area’s three transit systems, which and shutting down the system at 9 p.m. “To see
include the country’s second-biggest subway and ridership plummet and not return was a shock to
elevated train network, are predicting combined our system,” Powers says. “We were very thoughtful
deficits of $730 million in 2026, growing to $1.2 bil- about every step we took. It was all hands on deck
lion in 2031. Officials in the region say they’re con- to advocate for emergency funds and to be strategic
sidering options such as a sales tax hike, congestion with our finances.” �Skylar Woodhouse
pricing for drivers and an appeal for greater sup-
THE BOTTOM LINE US transit ridership is at about 80% of 2019
port from the state. Without a funding increase, levels. While that’s better than during the depths of the pandemic,
riders in the region could see service cuts of 30% systems are still left scrambling to make up for budget shortfalls.
 Bloomberg Businessweek November 13, 2023

E The Goldilocks Economy

It feels just right at the moment—but wait until the bears show up

C The long anticipated US recession may still be

lurking out there, somewhere. But for now, the
spending, and house prices have held firm. Signals
from the Federal Reserve that it may have ended

O
economy is barreling toward 2024 in better shape its aggressive cycle of interest rate hikes have fur-
than even optimists had expected only six months ther buoyed hopes for a soft landing.
ago. Growth in the third quarter blew past expec- Wall Street economists are leaning on a time-
tations, jobs remain plentiful, consumers are still less fairytale to sum up the current outlook: not

N
O
26
M
I ILLUSTRATION BY ANNA HAIFISCH. DATA: US BUREAU OF LABOR STATISTICS, CONFERENCE BOARD, INSTITUTE FOR SUPPLY MANAGEMENT, FEDERAL RESERVE

C
S

Edited by
Cristina Lindblad and
Margaret Sutherlin
◼ ECONOMICS Bloomberg Businessweek November 13, 2023

too hot and not too cold. “I feel like I am in the US households, meanwhile, are relying more ▼ Monthly change in
US nonfarm payrolls,
middle of a Goldilocks story,” wrote Stephen on plastic. Credit card balances are now $154 bil- seasonally adjusted
Stanley, chief economist at Santander US Capital lion higher than they were a year ago, the larg-
Markets LLC in a recent note. JPMorgan Chase est annual increase since the New York Federal 800k

& Co.’s chief US economist, Michael Feroli, also Reserve began tracking the data in 1999, its
name-checked the children’s classic in a report, researchers said in a blog post on Nov. 7. More
saying, “For now it looks like Goldilocks.” Dario worrisome is that delinquency rates have climbed 400

Perkins, managing director at TS Lombard, posted above pre-pandemic levels.

on X, formerly Twitter, an animation of the tiny Look around and you’ll find other signs of
trespasser slurping her porridge. weakness. One measure of US factory activ- 0

Still, if the story of Goldilocks tells us anything, ity tumbled to a three-month low in October as 1/2021 10/2023
it’s that the bears eventually arrive. Soft-landing sagging orders undercut hopes that the sector is
skeptics say the question isn’t whether the econ- turning the corner. Another gauge, the Institute ▼ Conference Board
Consumer Confidence
omy slows from here, but by how much. “I do for Supply Management’s purchasing managers Index
think we are approaching something of a turning index, fell 2.3 points for the month, the biggest
point,” says Nancy Vanden Houten, a lead econ- decrease in more than a year, to 46.7. (Readings 140

omist at Oxford Economics. “The economy has below 50 indicate contraction.) The service sector
been much more resilient than we expected, but expanded in October, though at the weakest pace
we expect a fairly significant slowdown in the in five months, with employers scaling back hiring. 110

quarters ahead.” For now, the optimistic case is holding up. And
Emerging signs of a softening labor market the Fed’s recent decision to hold interest rates
and sagging consumer confidence indicate that steady for a second straight meeting, followed by 80

interest rates at 22-year highs are beginning to comments from Chair Jerome Powell that it’s an 1/2019 10/2023
have an impact. Job growth slowed by more than open question whether the central bank would
expected in October, with nonfarm payrolls ris- need to hike rates again, has calmed fears that ▼ ISM Manufacturing
Purchasing Managers
ing by 150,000, about half the pace of the previ- policymakers may overdo it and tighten too much. Index, seasonally 27
ous month, with the unemployment rate rising to Trading in interest-rate derivatives shows market adjusted

an almost two-year high of 3.9%. Monthly wage participants see only a 20% chance of another Fed
growth slowed, which is obviously nothing to rate hike by January. 60%

cheer about for US households. But it’s good news Yet as Janet Mui, head of market analysis at
for the Federal Reserve, because above-trend pay wealth manager RBC Brewin Dolphin, points out,
increases complicate the central bank’s task of if wage growth and economic activity don’t moder- 40

guiding inflation back to its 2% yearly target. ate enough to ease inflation back to 2%, there will
How the labor market holds up over the com- be pressure for policymakers to hike again. “The
ing months will dictate where consumer spending soft-landing scenario is more likely if the Fed turns 20

and the broader economy go. If unemployment more accommodative next year, but that remains 1/2019 10/2023
continues to rise, it will bleed into consumer con- unlikely if data remains healthy,” she says.
fidence, which has already dropped to a five- An important side effect of softening data and ▼ Share of banks that
are tightening standards
month low, mostly because of worries about high the Fed’s latest signal has been a big drop in US for commercial and
prices, especially for groceries and gasoline. The Treasury yields, which had been sending mort- industrial loans

Conference Board Consumer Confidence Index gage rates and borrowing costs ever higher. At Loans to large
and medium-size
fell to 102.6 last month from an upwardly revised one point this month, a rally in Treasuries caused companies
104.3 in September. 10-year yields to post their biggest single-day Loans to small
Federal Reserve Bank of Atlanta President declines all year, offering a small measure of relief companies

Raphael Bostic says executives at large and small to would-be borrowers. 100%

lenders tell him they’ve grown more cautious. Nela Richardson, chief economist at pay-
“They’re not looking to lend as robustly as they roll processor ADP, says a combination of slow-
might have otherwise. And when they do, it’s ing inflation and an economy that’s still growing 50

usually for less than they would have before. So bodes well for the months ahead. “A resilient con-
I think there is clear evidence of the slowdown, sumer and steady job market potentially could
and that mindset I don’t expect will change in the help the Fed pull off one of the greatest come- 0

next several months,” Bostic said in an interview backs of all times,” she says. �Enda Curran
with Bloomberg News on Nov. 3. Sooner or later,
THE BOTTOM LINE Third-quarter growth was a stunner, but -50
tighter credit conditions will put a damper on cor- a slew of recent indicators all point to an economy that’s losing
porate investment and hiring. momentum. And that’s not necessarily a bad thing. Q3 ’90 Q3 ’23
 ◼ ECONOMICS Bloomberg Businessweek November 13, 2023

levels of stability and one of the highest living

Uruguay Puts Out standards in Latin America, thanks to an extensive
welfare state and buoyant exports of farm goods ▼ Argentines obtaining

The Welcome Mat and software. It’s also largely free of the vio-
lent crime—such as kidnapping for ransom—that
permanent residency
in Uruguay

haunts the rich in Brazil, Mexico and other Latin 10k

● Wealthy expats are flocking to the low-crime American countries.

South American tax haven Uruguay is now home to some of the region’s
leading tech entrepreneurs, including Argentina-
born Mercado Libre co-founder Marcos Galperin, 5

At the Atlantic resort of Punta del Este in Uruguay, Nubank co-founder David Vélez and Globant
signs of an influx of wealthy residents are every- co-founder and CEO Martín Migoya.
where. The yacht club is now busy year-round, There’s been a notable uptick in immigration
enrollment in private schools has swelled, and from neighboring Argentina in recent years, as 0

Italian developer Cipriani is breaking ground on the economy there has cratered and inflation has 2017 2023
AS OF 9/19
what it says will be the “largest luxury complex in soared. Argentina’s consumer price index logged a
South America.” 138% year-on-year increase in September, compared
Wedged between Argentina and Brazil, Uruguay with 3.9% in Uruguay. More than 22,400 Argentines
has long attracted wealthy visitors from both coun- secured permanent residency from 2020 to
tries, especially during the summer months of 2022, according to data compiled by Uruguay’s
December through February. But in recent years, Foreign Ministry—a fourfold jump from the previ-
more rich foreigners, mostly Argentines but also ous three years. The exodus has eased this year, but
Americans and Europeans, have been putting it could well resume after Argentines elect a presi-
down stakes. dent later this month. (Uruguay’s fiscal authorities
The draw isn’t only the roughly 140 miles of don’t release data on tax residency status.)
28 Atlantic coast dotted with beach towns, includ-
ing a stretch that’s been dubbed the Hamptons
of South America. Months after taking office
in March 2020, President Luis Lacalle Pou, a
50-year-old proponent of free-market policies (and
an avid surfer), issued a decree making it easier
for foreigners to choose Uruguay as their domicile
for tax purposes.
To be eligible under the rules, expats must
spend no fewer than 60 days in the country and
buy property worth a minimum of about $500,000
or invest at least $2.2 million in a business. The
MICHAEL RUNKEL/ROBERT HARDING PICTURE LIBRARY/SUPERSTOCK. DATA: URUGUAY’S FOREIGN MINISTRY

payoff: no taxes on foreign investment income

for 11 years. “Over time we saw very important
changes in terms of Uruguayan laws that attracted
more of a presence of ultrahigh-net-worth” indi-
viduals, says Thiago Alonso de Oliveira, chief exec-
utive officer of Brazilian luxury developer JHSF
Participações SA, which operates a gated commu-
nity in Punta del Este. The influx is benefiting local businesses and ▲ Punta del Este

Those changes are in sharp contrast to the services that cater to the well-heeled. “Five or six
tax-the-rich ethos taking hold elsewhere in Latin years ago, the club practically closed in the winter.
America, as governments look to cover budget Now it’s active all year,” says Juan Etcheverrito, who
deficits and address inequality issues that the pan- oversees the yacht club in Punta del Este under the
demic exacerbated. Colombia slapped a new tax on honorary title of commodore.
the wealthy that took effect this year, and Brazil’s At the Garzón School, a K-5 bilingual education
Congress is debating similar legislation. center in the community of La Barra, where tui-
In a corner of the world frequently rocked by tion runs $20,000 a year, immigrants make up more
political turmoil and plagued by yawning income than four-fifths of the student body, says co-head
gaps, Uruguay has long stood out for its enviable Samuel Irving, a British expat. The school’s
GREATNESS
IS GIVING
 ◼ ECONOMICS Bloomberg Businessweek November 13, 2023

waiting list is so long that it plans to break ground Construction started earlier this year on the first
early next year on a $7 million campus for 180 stu- phase of the Cipriani Ocean Resort Club Residences
dents that will combine high-tech features such & Casino in Punta del Este, a $450 million develop-
as a robotics lab with 38 hectares (94 acres) of ment that will include a hotel and three residential
countryside. “We have a lot of families from the towers ranging from 30 to 60 stories.
tech startup sector and a lot of the families that Many senior executives are also settling in or “We are
have local businesses,” says Leona Dauphin, who near Montevideo because of its international air- seeing more
runs the school with Irving. port and broader service offerings. The share of for- Americans
The proximity of Uruguay to countries that eigners living at the 350-hectare La Tahona gated and Europeans
are home to large family fortunes and new tech community near the capital has increased since the than before”
money, such as Brazil, Argentina and Chile, have pandemic, to about a third of its 1,200 families, says
made it a popular destination for money manag- Ignacio Añon, whose family controls the complex.
ers in recent years. At the end of 2022, 951 finan- Using the proceeds from a recent bond sale, Añon
cial advisers managed almost $29 billion on behalf plans to double La Tahona’s housing stock to about
of more than 36,000 clients, according to central 2,600 units by 2030.
bank data. During an interview in Miami in April, Mercado
International developers have wasted no time in Libre’s Galperin summed up the appeal of his
building expensive digs for the new arrivals. JHSF adopted country: “Unfortunately, it seems to
is expanding its Fasano las Piedras gated commu- be an exception in Latin America. It’s basically
nity near Punta del Este, where homes can sell a country that I would say embraces democracy
for several million dollars. Amenities include an and embraces capitalism. And those two things
18-hole championship golf course and a private air- are generally good for business.” �Ken Parks and
strip. “There is a growing number of permanent Daniel Cancel, with Anna Jean Kaiser
residents at Las Piedras,” says JHSF CEO Alonso.
THE BOTTOM LINE Wealth advisers, private schools and
“We are seeing more Americans and Europeans developers are benefiting from an influx of rich foreigners into
30 than before.” Uruguay since the country eased rules on tax residency.

Slow Burn ● A multiyear trial may pave the way for a legal
cannabis market in the Netherlands

It’s a common misconception that weed is legal in of the largest legal cannabis markets in Europe,
the Netherlands. It’s not. with sales exceeding €250 million in 2027” in the
For five decades the country’s official policy cities participating in the trial.
has been to tolerate the sale of small amounts Years of pressure from mayors of small
of marijuana in what are locally known as towns and campaigns from growers eventually
“coffeeshops.” But possession of more than 5 grams shifted the political winds in favor of cannabis
(0.2 ounces) of pot is unlawful, as is commercial advocates. The Netherlands has been at a “stand-
cultivation—though in practice, authorities have still” for a long time, says Rick Brand, owner of the
often turned a blind eye. Baron coffeeshop in Breda, one of the first loca-
Starting in mid-December, a group of three tions that will stock the regulated product. “I’ve
officially approved companies will be allowed to always taken pride in selling cannabis. It never felt
domestically grow and supply marijuana to the criminal, and now the rest of the world is coming
coffeeshops for the first time. to the same realization.”
Today, the underground cannabis market in In 2020 the government selected 10 growers to
the Netherlands is worth an estimated €1.3 bil- take part in the trial, including foreign companies
lion ($1.4 billion) annually. Researchers at Village Farms International Inc. of Canada and
Prohibition Partners, a cannabis data company, CanAdelaar BV, which has operations in Canada and
forecast that the first year of regulated sales Austria. Eight Dutch companies are also included;
could reach €158 million, and, if the trial suc- some are newly established, whereas others have
ceeds, the Netherlands will “quickly become one had separate medical marijuana operations.
Hundreds of premium channels.
Endless free streaming.
Watch over 300 free channels* including Bloomberg TV+ and
Bloomberg Originals on your -G Smart TV or lgchannels.com
*Number of -G Channels subject to change.
 ◼ ECONOMICS Bloomberg Businessweek November 13, 2023

The trial will begin on a small scale, with three

of the growers—Aardachtig, CanAdelaar and Fyta—
supplying coffeeshops in Breda and Tilburg. At the
end of the first quarter of 2024, the pilot is set to
expand to nine more cities, including the eastern
area of Amsterdam. Coffeeshop owners in all the
participating cities will be required to buy from
sanctioned producers only, and after at least four
years, the government will evaluate the results
of the experiment and determine whether it will
formally amend cannabis legislation.
Dutch Health Minister Ernst Kuipers says the
goal of the pilot is to create a closed system to “con- ▲ Marijuana for sale at
the Baron coffeshop
trol the whole pathway from growing to the end in Breda
user.” Along the way the government will look at
the impact on the illegal market and crime, public
health and usage. “We’ve been a pioneer for many
years,” Kuipers says. “People have been accustomed
to it, and that means it really limits the overall use.”
He compares the approach the Netherlands is
adopting to Canada’s, where there’s licensed com-
mercial cultivation and regulations related to grow-
ing the plants at home for personal use. Canada
didn’t have a major uptick in usage after legaliza-
tion in 2018. From an economic standpoint, legal-
32 ization has brought benefits. One study showed
cannabis contributed C$43.5 billion ($31.5 billion)
to Canada’s gross domestic product and C$15.1 bil-
lion into government coffers in the first three years.
The Dutch trial isn’t the only one in Europe at
this time. Switzerland is also testing a recreational
market. Germany and the Czech Republic are con-
sidering new proposals. But for the Netherlands,
it’s taken five years and several coalition govern-
ments to even get the trial underway.
Fyta Co. was ready to start distributing to stolen, a potentially expensive prospect for growers.
coffeeshops in May 2022, but it’s had to wait for And then of course, there’s inflation. “All prices
the other growers to get up and running. “For have gone up,” De Raad says, citing the rising cost
more than a year, we are catching flies,” says Chief of building materials and the electricity needed to
Executive Officer Fred van de Wiel. He says the power lighting, irrigation and heat systems.
delays have cost the company millions of euros. One big change will be that the large-scale pro-
Jetze de Raad, CEO of Holigram, the brand name duction of cannabis will attract bigger international
under which Grassmeijers BV operates, says he had companies and more professional growers to the
PHOTOGRAPHS BY CAROL SACHS FOR BLOOMBERG BUSINESSWEEK

an initial budget of about €25 million for the facil- scene. “I think the whole system is going to level
ity and is aiming to have the first marijuana plants up, and with leveling up, I mean there’s going to
sown in February. In the meantime, he’s had to be much more professionalism coming into the
negotiate several hurdles. industry,” says Orville Bovenschen, Village Farm’s
For some growers, something as seemingly vice president for European business development
straightforward as opening a bank account turned and operations. “The people that work for us, they
out to be “very problematic,” De Raad says. Banks have an MBA. Most people are plant scientists with
have concerns over money laundering and the can- a Ph.D. You’ve got a different group of people com-
nabis industry. Secure transportation from the ing into the industry now.” �April Roach
growers to the coffeeshops has also been an issue,
THE BOTTOM LINE The Dutch will soon begin a pilot that could
he says. A key government stipulation during the pave the way for legalization of the nation’s estimated $1.4 billion
test has been ensuring the cannabis can’t be easily cannabis market.
You just had
to be there.
To our sponsors and to everyone who came to
Screentime 2023, thank you for being there for
our news-making interviews, delicious food, and
memorable live podcasts and performances.

Couldn’t make it this year?

Catch up on all the convos at
bloomberg.com/btv/series/Screentime.

Don't miss out. Screentime

returns to LA, October 9-10, 2024.
Grab the pre-sale rate at
bloomberglive.com/Screentime.
 Bloomberg Businessweek

34
 November 13, 2023

The world’s richest person,

boldest entrepreneur and most
controversial CEO is moving
forward with his grand ambitions
for neural implants. Is he the one we
want messing with our heads?

By Ashlee Vance
Photographs by Damien Maloney

35

▲ One of Neuralink’s monkey test subjects plays a game designed to help researchers identify certain thought patterns
 Bloomberg Businessweek November 13, 2023

lon Musk is preparing for the most consequential ▼ Neuralink’s prototype implant
launch of his career. But this one isn’t rocket science—
it’s brain surgery. Musk’s company Neuralink Corp.
is seeking a volunteer for its first clinical trial, mean-
ing it’s looking for someone willing to have a chunk of their
skull removed by a surgeon so a large robot can insert a series
of electrodes and superthin wires into their brain. When
the robot finishes, the missing piece of skull will have been
replaced with a computer the size of a quarter that’s meant to
stay there for years. Its job will be to read and analyze the per-
son’s brain activity, then relay that information wirelessly to a
nearby laptop or tablet.
For the purposes of the trial, an ideal candidate would be
an adult under age 40 whose four limbs are paralyzed. Such
a patient would likely have Neuralink’s implant inserted into
what’s known as the hand knob area of their premotor cortex,
which governs the hands, wrists and forearms. The goal is to
show that the device can safely collect useful data from that
part of the patient’s brain, a key step in Neuralink’s efforts in this slow-and-steady field, and it’s now built the world’s
to convert a person’s thoughts into a range of commands a most powerful and elegant brain implant. If the product
computer can understand. works as intended, later iterations could improve, in mirac-
Several companies and research teams have already cre- ulous ways, the life of millions of people suffering from paral-
ated implants that can help patients perform basic tasks with ysis, stroke, Lou Gehrig’s disease, and hearing and vision loss.
their thoughts, such as clicking objects on a screen with a cur- In the meantime, its high profile already has investors hunt-
sor. Neuralink, in familiar Musk fashion, has issued far wilder ing for the next Neuralink. Once again, Musk has reshaped
36 promises. For the past four years, starting with the company’s an entire industry, and this one could be the most transfor-
first public demonstration, he has made it sound as if there mative of all.
would soon be ubiquitous clinics where anyone could go in In the past three years, I’ve made 10 trips to Neuralink’s
for a 15-minute robosurgery and come out a human-machine facilities in Silicon Valley and its growing operations in Austin.
hybrid. These cyborgs would be able to download knowledge In tandem with Musk’s impatient demands, I’ve seen his team
the way Keanu Reeves does in The Matrix or upload their profoundly advance their technology and ambitions. As they
thoughts into storage, even to other brains. “This is going to prepare for the trial, the pressure to succeed is something
sound pretty weird, but ultimately we will achieve symbiosis even Musk hasn’t seen before. Tesla Inc., after all, took many
with artificial intelligence,” Musk said at that first demo in 2019, years to mass-produce its cars, and SpaceX’s first three rock-
when the company said human trials could begin in 2020. ets exploded. When it comes to brains, “We can’t blow up the
Unrealistic timetables are one of Musk’s favorite manage- first three,” says Shivon Zilis, Neuralink’s director of special
ment techniques. To his credit, he’s made several improba- projects. “That’s not an option here.”
ble dreams come true—eventually. But while rockets and cars
are serious business, neural implants require perfection on a he modern history of brain implants began with the
whole other level. One does not rush a brain implant to mar- technological advances of the 1990s. The science, sim-
ket and hope for the best. plifying tremendously: Thoughts cause neurons to fire in
Two other companies, Synchron and Onward, have more particular patterns, and these patterns have some degree
than a year’s head start on human trials with brain implants of consistency across brains. In fact, roughly the same neu-
and related technology. Neuralink has, however, gotten dra- rons fire when a person thinks about moving their arms and
matically more attention than the decades of incremental, fingers, whether they can physically move them or not. Brains
largely academic research that preceded it, and not always light up in similar, consistent ways when people want to move
to its credit. Some neuroscientists have said Neuralink is hyp- a mouse cursor to click somewhere on a computer screen,
ing the technology. Animal-rights groups have accused it of too. The same is true for speech: If you can think of saying a
cruelty to the monkeys, pigs and other mammals it’s tested letter or word, you’re making the same neurons fire as you
implants on so far. The through-line is Musk, whose increas- would by physically speaking it. Even if you can’t speak then,
ingly manic and reactionary online persona has done little a well-trained computer should be able to discern your intent
to suggest he stands as the ideal candidate to mass-produce and, theoretically, speak for you.
mind-control devices. The challenge is figuring out each entry in the
All these concerns are valid. Yet Neuralink’s trial is excit- neurons-to-English dictionary, which requires gathering and
ing, too. The company appears to have turbocharged progress studying tons of data about the patterns of many people’s
Bloomberg Businessweek November 13, 2023

brain signals. To get the clearest signals, you want to place Most of these enterprises have the same primary objective:
sensors as close to the neurons as possible. Some researchers Build a brain-scanning device that can leave the lab behind.
have tried to avoid surgery by keeping their devices outside a The ideal implant will have plenty of computing oomph to
person’s skull, but the added distance and interference have record and input lots of data and also to transmit the data via
yielded muted results. The most precise data usually comes strong wireless signals. This must all be done while using as
from electrodes sitting right beside brain cells. little battery power as possible and without running too hot,
For most of the past 20 years, the Utah array has been the which could irritate or injure a patient. Beyond the hardware,
implant to beat. It’s a tiny, flat square of silicon that could fit the brain-computer interface companies also need serious
atop a child’s fingernail. Wires protrude from its edge, and machine-learning software skills and to perform thousands
on one face of the chip is a bed of about 100 rigid spikes. To upon thousands of tests.
implant the Utah array, a surgeon must perform a craniotomy, Neuralink’s implant sits invisibly beneath the scalp,
cutting a large hole in the patient’s skull, then gently ham- flush with the skull. It’s also packed with enough comput-
mer the tiny spikes into the brain. The wires are positioned ing horsepower to handle jobs well beyond think-and-click.
to connect to a metal port that visibly pokes out of the scalp In the nearish future, the idea is to enable high-speed typing
after the opening is sutured shut. Post-op, to use the device, as well as seamless use of a cursor. Neuralink has also been
an ice-cube-size computer is attached to the patient’s head. working on a complementary spinal implant intended to
Researchers have made major advances with Utah arrays. restore movement and sensation in paralyzed people. “The
They use them to read and translate the brain activity of short-term goal of the company is to build a generalized 37
people with paralysis and other conditions. Software created brain interface and restore autonomy to those with debil-
with this information allows patients itating neurological conditions
to communicate with caregivers and and unmet medical needs,” says
loved ones, or to manipulate robotic DJ Seo, a Neuralink co-founder
arms to pick up objects. The catch is and vice president for engineer-
the hardware’s clunky design, which ing. “Then, really, the long-term
has remained largely unchanged over goal is to have this available for
20 years. The arrays also need a raft of billions of people and unlock
computers and other equipment oper- human potential and go beyond
ated by trained personnel and lots of our biological capabilities.”
medical care, which has kept them Although some competi-
confined mostly to research labs. tors have beaten Neuralink to
Musk co-founded Neuralink human trials, the company’s raw
in 2016 with seven scientists and technology is closest to being a
$100 million of his own money. The general-purpose computer in the
splashiness of his investment, and brain. The implant has more than
his grand promises about the under- 1,000 electrodes for gathering
pinnings of the technology, proved brain data, compared with 16 or
irresistible to venture capitalists. so in rival devices. The Neuralink
Neuralink has since raised more than hardware is a nesting doll of pro-
$500 million, including $280 mil- cessing, communications and
lion this year, and the attention charging systems, including a
has helped draw investors to other battery and signal amplification.
brain-computer interface efforts, Competitors, meanwhile, must still
including long-standing university connect their implants via wires to
projects as well as newer startups. bulky pacemaker-size battery and
Last year, 37 such companies raised amplifier units that are often sur-
more than $560 million, according to gically implanted in a patient’s
▲ Neuralink makes microelectronics in-house
the research company PitchBook. chest. Neuralink’s battery lasts
 Bloomberg Businessweek November 13, 2023

a few hours and can be recharged wirelessly in a couple of dodging blood vessels. No human would be allowed to try
hours via a custom baseball cap. this given that each thread is 5 microns thick, or about 1/14
Another favorite Musk move is bringing key manufacturing the diameter of a strand of human hair. To further avoid dam-
in-house, which adds financial risk, obviously, but saves time. aging tissue, the threads have been engineered to be a mix of
Neuralink even makes its own semiconductors, an exceed- thin, pliable and sturdy and coated with a special polymer to
ingly rare step in the medical-device business. It tailors them keep them from deteriorating over years.
specifically for its low-power, low-heat needs. In Austin it’s Neuralink’s dozen or so robots performed 155 of these sur-
turned a former ax-throwing bar into a 12,000-square-foot geries on sheep, pigs and monkeys in 2021 and 294 last year.
implant manufacturing line and testing center. Along with the With human subjects, the surgical prep and craniectomy are
usual mills, lathes and laser cutters, the shop includes more expected to take a couple of hours, followed by about 25 min-
outlandish equipment, such as a refrigerator-size cabinet— utes for the actual implantation. “The last two years have
filled with a type of synthetic brain fluid—that heats, cools and been all about focus on building a human-ready product,”
jostles implants to simulate years of wear and tear. Seo says. “It’s time to help an actual human being.”
The priority during the surgery is to avoid creating any During one of my visits, Musk pushed Seo and the rest of
bleeding or scar tissue in a patient’s brain. To that end, the engineers to do more, and faster. He wanted the robot to
Neuralink also built its own surgical robot. It’s a hulking, perform the surgery in less time and ideally without the help
7-foot-tall white machine with a steady, cubed base support- of a human surgeon. He wanted semiconductor experts to for-
ing a tower of electronics and equipment. get what they learned in school and try out simpler manufac-
Once a human surgeon cuts a hole in a patient’s skull, turing techniques. He wanted the implant to look sleeker and
the robot performs the ultra-delicate task of placing the last longer and, well, maybe everyone needed to rethink just
electrode-laced wires, which Neuralink calls threads, into about everything. I saw scientists wince as they considered
the brain. The robot has cameras, sensors and a tiny laser- the distance between their boss’s demands and the physical
milled needle that it hooks into a loop at the end of each capabilities of their hardware. But I also saw Musk perform a
thread. One by one, the needle pushes the 64 threads, each type of pattern-matching for which he was especially suited,
lined with 16 electrodes, into the brain, all while carefully thinking ahead to how a range of design tweaks would affect
38

▲ Seo (left) and Barenholtz discuss data in Austin in September

Bloomberg Businessweek November 13, 2023

▼ Autumn Sorrells with Neuralink sheep ▼ A sheep rigged with the implant and battery pack

mass production down the line. His been-

there, done-that attitude seemed to give
the staff confidence that he was right—that
he had some master plan he knew they
could pull off.
Musk’s management style has its
upside. It’s yielded the world’s most suc-
cessful rocket and its most valuable car
company. Of course, as anyone who’s Googled “Cybertruck our ass. I want to be in dozens of people next year.”
window” can tell, his first drafts can be a mess. And, as he’s His lieutenants grimaced in sync. Barenholtz had the unen-
torn X, né Twitter, down around himself, he’s shown that viable task of explaining to Musk that the FDA wanted to wait
the engineering shoe-banging doesn’t always lead to rational at least a year after the company’s first surgery took place to
product choices. try to implant more individuals.
“Unacceptable,” Musk said. “Generally, the way regulators
eo and Musk are the only Neuralink founders still with work is that they’ll say one thing and that they really just kind 39
the company. (The other six left of their own voli- of want to see what happens. If the patient is an advocate for
tion or because of disagreements about the compa- the device and says it’s incredible and that we see no compli-
ny’s direction; a number of them have since started cations, they will approve the next one very quickly.” It was
similar companies.) Seo runs development of both the implant like SpaceX getting federal approval for more rocket tests, he
and the surgical robot. Jeremy Barenholtz, a computer scientist said: “If the thing is working well, and you get a letter-writing
only two years out of Stanford University, has arisen as one of campaign to the FDA, I guarantee they’ll move.”
the lead executives and has managed the arduous US Food and At another “update Elon” meeting a couple months later,
Drug Administration approval process. Musk tends to pop in Musk trained his sights more on Onward, which makes
and out, but he looms as the ultimate authority and chief exec- implants that nestle against the spine. Its device, which
utive officer. A July 2022 visit to the company’s headquarters sends electrical pulses that help reanimate muscles, has
in Fremont, California, showed how that works in practice. enabled people with paralysis to walk again. Their gait tends
Musk summoned top executives and engineers to catch to be somewhat herky-jerky, but for people who’ve been
him up on the latest progress toward human trials. The team paralyzed—and their loved ones—the act of standing and walk-
gathered at a rectangular, Ikea-style table in the office’s main ing again can be similar to a religious experience.
work area. It’s a large, open-plan space full of people at com- Musk was also there to prepare for an important demo.
puters, robot prototypes and testing equipment. Musk, wear- Neuralink was planning to announce that it had started work
ing a black suit and holding a Red Bull, stood at the head of on its own spinal implant, to be paired with its brain implant.
the table and started asking about competitors. As employ- This time, Musk seemed more agitated, and he pushed harder.
ees gave updates, he peppered them with technical ques- “In general, the company needs to make faster progress,”
tions. He was particularly focused on Synchron, which had he said to Joseph O’Doherty, one of the assembled engineers.
already received regulatory approval to begin human trials. “The pace of progress is too slow.”
Synchron’s pitch is technology that doesn’t require “OK,” O’Doherty said.
cutting into the skull. It makes a small, stentlike product “Step it up.”
called the stentrode that can be slid into a brain blood ves- “OK.”
sel through a patient’s vascular system. The hardware can’t “Yeah.”
sit right against neurons for the best signals, but patients “OK.”
with paralysis were already using it to navigate web pages “I mean it.”
and send WhatsApp messages. “We should be far exceeding “Understood.”
the stentrode,” Musk said. “And they are currently kicking “Step it up. Let’s go.”
 Bloomberg Businessweek November 13, 2023

None of this was playful. O’Doherty took it in stride outlets have detailed surgical complications, behavioral side
and rolled right into a lengthy presentation on Neuralink’s effects and prolonged suffering, particularly with Neuralink’s
progress with its early spinal technology, showing videos of primate subjects. Some implanted monkeys, the reports said,
an implant being used to stimulate the legs of pigs to make scratched and yanked at their heads until they drew blood,
them walk on a treadmill. The conversation covered differ- or acted despondent or agonized until they were euthanized.
ent parts of the brain, parts of the spine, spike grids, joint Wired’s recent stories, which describe the monkeys’ deaths
angles, machine-learning models and more. Musk, who has as “gruesome” and “grisly,” were based on public records it
no formal medical training, kept up with it all. He made sug- obtained and interviews with researchers.
gestions on how the implant could be tweaked to perhaps Neuralink acknowledges that it’s made mistakes during
produce a less jerky motion in the animal’s gait. exploratory surgeries, though it attributed them to human
His ideas were sometimes far afield of practicality, but error rather than issues with its equipment. It stresses that
then also often spot on. Following one visit, the semicon- the most troubling reports are drawn from its early years,
ductor engineers retooled their process for bonding the before it built its own testing facility in Fremont, and that it
threads to the company’s chips on Musk’s advice, and their has gone to great lengths to provide better living conditions
manufacturing speeds went up 50% while defects went down, there. “I will always find a way to protect the animals in front
according to Zack Tedoff, the chip division’s head of brain of me,” says Autumn Sorrells, who manages Neuralink’s non-
interfaces. The team working on the spinal implant went back human test subjects and previously oversaw lab-animal wel-
40 to the drawing board to try to get their pigs to walk in a more fare at the University of California at San Francisco. “We get
true-to-life manner, and Barenholtz more or less started liv- called ‘killers’ and ‘animal abusers’ and then have to come
ing at the office to address Musk’s every demand. in to work and snuggle a sheep and make sure they have a
Musk turned out to be right about the FDA. Neuralink has great day. That’s f---ing hard.” She says Neuralink’s animals
received an outpouring of interest from thousands of prospec- have larger cages, more food and entertainment options, and
tive patients, and the agency recently gave it the green light to much more socialization than she’s seen in other lab settings.
perform additional implant trials in 2024 without a yearlong This squares with my reporting. I’ve seen the same group
evaluation period. The company estimates that each implant of rhesus macaque monkeys living at Fremont for three
surgery will run it about $10,500, including exams, parts and years now. They’ve all had implants in their brain at various
labor, and that it will charge insurers about $40,000. It fore- points. The devices can be removed, and a couple have been
casts annual revenue as high as $100 million within five years. upgraded to newer models. Seventeen of the monkeys are
Neuralink says it plans to perform 11 surgeries in 2024, 27 in still active, healthy and feeding Neuralink brain data on-site;
2025 and 79 in 2026. Then things really ramp up, going from three retired to a sanctuary; and one was euthanized during
499 surgeries in 2027 to 22,204 by 2030, according to docu- a planned terminal procedure.
ments provided to investors. Before you can enter the animal facility, you have to don
Before that September 2022 meeting ended, Musk stressed gloves, a gown, booties, a mask and protective eyewear. You
speed on an entirely different level, “like the world is com- also get a briefing on how to approach the animals: slowly,
ing to an end.” The reason the staff needed to work dramati- carefully, sans eye contact. If you look a monkey in the eye, a
cally faster, he said, was to make sure hybrid human-implant signal of aggression, the monkey might freak out. Inside, spa-
brains stayed competitive with a theoretical artificial super- cious playpens are filled with toys, faux trees and playground
intelligence that might otherwise wipe out humanity. “We equipment. Music is often playing throughout the facility, and
need to get there before the AI takes over,” he said. “We want TVs are on hand, showing mostly nature programs.
to get there with a maniacal sense of urgency. Maniacal.” The monkeys’ primary role is to demonstrate that both the
device and the surgical robot can work as intended. When
here’s nothing pleasant about testing medical devices on they feel like it, they also contribute to the company’s thought
animals. The practice is, on some level, a form of animal translator by playing computer games.
sacrifice on the altar of science, increasing their pain in the Yes, Neuralink has a room full of monkeys that sit in front
hope of decreasing it in humans. Yet Neuralink has come in of computers and have their mind read, and it looks weirder
for special scrutiny regarding its treatment of animal test sub- than it sounds. For a couple of hours a day, they stare at lap-
jects, especially this year. Reports in Wired, Reuters and other top screens that are wheeled into position just outside the
Bloomberg Businessweek November 13, 2023

▼ The surgical robot with a practice dummy under a sheet

41

cages. They can choose from games that involve joysticks and indoor-outdoor space for its primates. Today, it has dozens of
touchscreens (such as tracing letters and spelling words) or sheep and pigs penned there. During a recent visit, the pigs
games that depend on brain-controlled clicking. In one exam- were wearing little backpacks that held batteries and fed power
ple, a 35-by-35 grid of small boxes appears on the screen, to a patch atop their head to keep their implants charged. The
then one box suddenly lights up. The monkey’s goal is to animals also have buttons in their pens they can press with
move a cursor onto the lit box just by thinking it. The mon- their snouts to ask for food or a trip outside the barn.
keys get faster at the tasks over time, and the expectation is It’s a long way from the snout button to 22,000 human
that humans will, too. implants. Just as with a rocket malfunction, a surgery gone
It’s common for contract research centers to perform wrong or an implant that leaks chemicals into someone’s
similar work by withholding food and water from the ani- brain would set the company back years. And beyond basic
mals and pinning their skulls to metal rigs to hold their head safety, the device has to live up to its promise. Humans will
in place. Instead of experiencing such Clockwork Orange-style be able to tell the world things about the implant that mon-
torments, Neuralink’s monkeys snack on fruit and smoothies keys can’t, including where its limits are. So far, download-
while they do their jobs and stop when they want. “Anytime ing kung fu into your brain, let alone doing battle with an
they leave what we call the consent area, that means they’re evil super-AI, remains sci-fi. Seo says that future implants will
done and that we need to back off,” Sorrells says. (The animals likely have 128 or more threads and that the next version of
pick their food and soon their TV programs from an iPad.) Neuralink’s custom chip should extend battery life to as long
She’s unapologetic about Neuralink’s desire to move fast if as 11 hours. “The goal is to get to a full day,” he says, at which
that means a human gets a life-altering device sooner. “It’s point patients will be able to recharge their implant overnight
unethical not to be hyperfocused on this,” she says. via a charging pad built into a pillow.
The company is beginning to shift the balance of its animal The Elon of it all makes a lot of things tougher. And yet, if
testing and much of its operations from California to Texas, his bluster pays off here, he’ll have played a central role in mas-
where there’s a newer, bigger campus on 37 acres of ranch- sively improving the life of a great many people. He’ll deserve
land outside Austin. This location has a surgery facility with some of the credit even if it’s Synchron or Onward or some-
multiple operating rooms, barns, a pathology building and a body else that becomes the industry standard. If that thought
sci-fi-themed employee bar. Neuralink says it plans to build an makes your eyes roll, just try not to think about it too hard. <BW>
 Bloomberg
Blo
lo
oom
omb
omb
mbeerg
er
rg
rg Businessweek
Bu
B us
sin
siines
ess
e ss
sswee
we
wee
e ek November
No
N
Nov
ovvem
o emb
e m
mbbe
ber
err 13,
13
13
3,, 2023
20
2 02
233

42

AGES
731; PHOTO: GETTY IMAGES

Most American voters are dissatisfied with the president and his
p r e d e c e s s o r. B u t w h e n t h e c o u n t r y g o e s t o t h e p o l l s o n N o v. 5 , 2 0 2 4 ,
one of them is almost certainly going to win
PHOTO ILLUSTRATION
ILL

By Joshua Green and Nanc y Cook

 Bloomberg Businessweek November
mber 13,
13
3, 2023
20
2 02
0 23
2 3

Call it the election no one wants. realize that unless something radical happens, they’re y’re in for
With a year to go until Election Day, a record share of a repeat of 2020. Even hardened partisans aren’t thrilled
hrilled by
Americans hold unfavorable opinions of both major parties this prospect. For everyone else, a Trump-Biden rematch is
and take a dim view of the front-runners. Most voters say they about as welcome as a root canal. (A Biden campaign official
don’t want Joe Biden to be president. Or Donald Trump. says off-year polls aren’t indicative of how people ultimately
But anyone hoping for a better option is likely to wind up vote and added that polls are often incorrect. The Trump
disappointed. Although voters and party leaders have
disappoin campaign didn’t respond to requests for comment.)
doubts about both men, the same polls show Biden Amy Walter, editor of the nonpartisan Cook Political Report,
and Trump poised to coast to their parties’ nom- often sits in on focus groups of independent and undecided
inations
in once the primaries begin in January. voters, many of whom long ago soured on the likely nominees
The last time an incumbent president lost, ran
T and dread the prospect of voting for either. “There’s substan-
against the same opponent four years later tial disappointment, even disbelief, that this is going to be the
and returned to the White House was in 1892, choice,” she says. “Swing voters would rather eat a bowl of
when Grover Cleveland faced off against glass than have to choose between Trump and Biden again.”
Benjamin Harrison. In a race that’s so far held few surprises and little drama,
Americans aren’t itching for a rerun. A the biggest question on the minds of these frustrated voters
recent Washington Post-ABC News poll found may be this one: How are two historically unpopular candi-
that only 37% approve of how Biden has han- dates poised to become their parties’ presidential nominees
dled his presidency, while only 38% approve without so much as a serious challenge?
of how Trump handled his. Half of respon-
dents say both men are too old to serve another
d          
term. While nominees often pivot to the center
term
for th
the general election, “you can’t pivot younger,” Republicans and Democrats both look as if they’ll renominate
warns Ja James Carville, who ran Bill Clinton’s first pres- last cycle’s candidates, but they arrived at this point through
idential camp
campaign. different avenues. Trump’s source of strength is his endur-
Neither Biden nor Trump has ever held a lofty approval ing support among his party’s rank-and-file voters, which has 43
rating. But negative sentiment has grown. An NPR-Marist poll overridden GOP establishment concerns that his unpopular-
found that 65% of voters don’t want Biden to be president
fo ity with independents and suburban women and 91 felony
again; 60% feel the same about Trump. About 1 in 6 voters
ag counts across four criminal cases could render him unelect-
(14%) don’t want either man to win, a group strategists call
(14 able next November.
“double haters.” That’s more than four times the number who
“d Trump didn’t bother showing up for the Republican debate
disliked both Trump and Biden when they faced off in 2020—
di on Sept. 27 in Southern California. But his presence loomed ed
and more than enough to swing the 2024 election. “The
a over the proceedings at the Ronald Reagan Presidential ial
question,” says Doug Sosnik, a veteran Democratic strate- Library, even though it was filled with candidates, operativeses
gist, “is who they’ll support.” and donors eager to move on from him.
Americans don’t agree on much when it comes to pol- Once the cameras started rolling, the seven Republicans ns
itics. But a majority of Democrats (68%), Republicans hoping to succeed Trump mainly swiped at one another over er
(57%) and independents (78%) do agree on one thing inflation, immigration, China and the flow of illegal drugs gs
in the latest Harvard-Harris poll: Rather than Trump or from Mexico, with a bickering intensity that quickly steered d
Biden, they’d like “another choice.” the debate into chaos. But none made a cogent case for why y
Viable alternatives are scarce. Biden faces no serious Republicans should abandon the former president, presum-
cchallengers in the Democratic primary. Trump commands ably because he is viewed favorably by around 80% of GOP
more support in Republican primary polls than all the other
m voters. The closest anyone ventured was Chris Christie’s
candidates combined, according to the latest FiveThirtyEight
ca charge that Trump was “ducking” the debates: “You keep p
polling average. “It is not mathematically possible to be the
po doing that, we won’t be calling you Donald Trump anymore, e,
GOP nominee unless you take away some of his support,” says
GO we’ll be calling you Donald Duck.” The line bombed. Trump mp
Terry Sullivan, campaign manager for Florida Republican
Te was unscathed. And Christie has wound up with the highest est
Senator Marco Rubio’s 2016 White House run, “and no one unfavorable rating of any challenger.
has been able to do that.” Several outsiders, including Cornel “The winner tonight was Donald Trump, by not ot
West, Robert F. Kennedy Jr. and Democratic Representative participating,” said Frank Luntz, a longtime Republican poll- ll-
CREDITS CREDITS CREDITS

Dean Phillips of Minnesota, have announced campaigns, but ster and Trump critic, who distilled his party’s odd predica-ca-
it’s not clear they’ll even make it onto the ballot. ment. “By disrespecting the process and the people, Trump mp
Like Bill Murray’s bedraggled TV weatherman in actually emerges stronger.”
Groundhog Day, doomed to repeat the same 24 hours over That in itself is an historical anomaly. After Trump’s 2020
and over again, American voters are gradually coming to loss, and especially after the Jan. 6, 2021, insurrection at
 Bloomberg Businessweek November
Novemb
Novemb
ber
e 13,
13
3,, 2023
20
2 023
02
23

the US Capitol, Republican leaders and major donors were Speaking softly into a handheld
ndheld
ready to move on. A new generation of governors, senators microphone as he shuffled around a
and ex-cabinet officials put themselves forward as candidates chintz-filled living room, Biden
den offered
to lead the GOP. Donors did their part, too, lavishly support- an often rambling defense e of his record—
ing these potential successors and heavily funding Florida big investments in chip and semiconductor tech-
Governor Ron DeSantis’ reelection bid in the hope that he nology; strengthened alliances with European allies, Israel and
would overtake Trump in the 2024 primaries. Through Japan—frequently trailing off into anecdotes that didn’t arrive
September, Federal Election Commission filings show that at any clear conclusion. Later, speaking in a backyard tent as
the eight major non-Trump Republican candidates and the heavy rain beat down, he held forth for more than an hour on
super PACs backing them have raised at least $328 million. global affairs and his economic record. But Biden made mis-
But Trump didn’t follow the script for one-term presi- takes, too, at one point saying “Iraq” when he meant Ukraine,
dents by gracefully bowing out. Nor was he spurned by the and mistakenly referring to his “good friend” Narendra Modi,
party’s grassroots, as previous losers were, because he man- the prime minister of India, as “Xi”—that is, Chinese President
aged to convince die-hard supporters that the election was Xi Jinping. Biden mixed up Iraq and Ukraine again the follow-
stolen from him and the criminal charges against him are ing morning as he left the White House.
unscrupulous attacks levied by a “deep state” furious that Afterward, Democratic donors lined up to defend the pres-
he’s fighting on their behalf. ident and try to redirect attention to Trump. “I am more wor-
By refusing to make way for the next generation of candi- ried about Trump’s mental acuity than Biden’s,” says John
dates, Trump has not only avoided the fate of a loser but also Morgan, a longtime Democratic donor and personal injury
taken on the electoral attributes of a winner—even though he lawyer. “Someone who mixes up a word is a lot different than
was cast out of the White House. someone who is clinically insane.”
“It’s very unusual for a party to have a president lose Carville, one of the few prominent skeptics in Democratic
and then run again,” says John Sides, a political scientist at circles, says his party is taking a risk by waving off the
Vanderbilt University. “But Trump, by doing so, has really president’s vulnerabilities. “Age is the big issue,” he says.
made himself into the de facto Republican incumbent, and “It’s not just what I think. The voters think it’s a huge issue.
44 that’s made it very difficult for the party to coordinate on That’s clear.” But Carville says he detects little appetite among
an alternative.” party leaders to try to replace the president, despite their rec-
ognition of the risk, in part because so many of them have
          personal relationships with Biden that date back decades. “I
think Democrats basically like the president,” he says. “And
Democrats hoping to move on from Biden have it takes a lot of stomach to mount a primary challenge.”
had the opposite problem. Polls show that voters have The other factor greasing Biden’s
Bid path to renomina-
substantial concerns about reelecting a presiden
president
nt who will be tion is the widespread
d spread Democratic belief that
wide
81 years old on Election Day. An August Associated
Asso
As sociated Trump will inevitably
ine be the Republican
Press survey found that 69% of Democrats believe nominee—and that despite his
nominee—
Biden is “too old to be effective.” age, Biden
Bid remains the party’s
But those fears were ignored by a best hope
h to defeat him next
Democratic establishment that’s closed November,
Nov bec ause he
ranks around the president, despite already
alr did so once and
his softening approval ratings and then
th bested Republicans
doubts about his capacity to serve again
a in the 2022 mid-
another term. terms.
t “The Democrats
Both factors were on display in n hate
h Trump so much,”
June, when Biden made an early forayy Sullivan
S says, “that they
into the 2024 campaign by headlin- are
a willing to coalesce
ing two intimate fundraisers around
a the only guy who
PHOTO ILLUSTRATION 731; PHOTO: GETTY IMAGES (2)

at private homes in Chevy has

h shown the ability to
Chase, Maryland, a few beat him.”
bea
miles north of the
White House.     
It remains tto
o be seen if the Democrats’
calculation ababo
about Biden’s electability
is correct,
rect, but
corre but their bet on
o Trump becoming the
Republican nominee looks sound
sound—despite his legal travails
Bloomberg
Blo
B
Blllo
oom
omb
o m
mbbe
errg
erg
rg Businessweek
Bu
B usi
us
sin
s iin November 13, 2023

and hhis own propensity for verbal miscues. Experts          

note th
that state-level primary rules in both parties have
been designed,
desi in many cases by Biden and Trump oper- Even so, the strength of the major-party front-runners hasn’t
atives, to pr
protect the incumbent—or, in Trump’s case, the dissuaded a handful of independent candidates from jump-
quasi-incumbent. That’s another reason a Biden-Trump ing into the race—including another Kennedy. Although the
rematch looks to be all but assured. Trump and Biden campaigns both think that the advanced
After Trump prevailed in the 2016 Republican prima- age and unpopularity of their rival will smooth their path to
ries, his inner circle, fearful that party insiders would rig the White House, a third-party candidate with even modest
the rules to hurt him, set out to rewrite them in a way that support next November could wind up being the deciding
would favor him in 2020. “Trump decided he didn’t want to factor in who wins.
lose any delegates,” says Josh Putnam, a political scientist “We have two literally old politicians, who reflect something
and expert on primary rules at the nonpartisan consulting we have been through, not something new,” says Julian Zelizer,
company FHQ Strategies. “So he and his people managed a professor of history and public affairs at Princeton University.
the rules to keep anyone who got less than 20% of the vote “They do not have a Kennedy or Obama level of inspiration,
from getting any delegates. And it worked. He wiped the and that could have an effect on younger voters.”
floor with all comers and got all the delegates.” Indeed, it’s younger voters who consistently express the
Putnam has studied the rules in all 50 states for next year most negative views of Trump and Biden and the strongest
and says Trump may be poised to repeat his showing. “The desire for better options. An Oct. 19 Pew Research Center poll
Trump team could not have turned the knob up much more found that almost half of Americans under age 50 wish there
to make the process more front-runner- were more political parties to choose
friendly this cycle,” he says. “He’s nicely Money Raised by GOP Candidates from. Older people are more resigned
set up the playing field for him and his Through September 2023 to the status quo.
campaign to run the table again.” ◼ Campaign ◼ Super PACs When voters are given options
As for Biden, Putnam notes that other than Trump or Biden, many take
$162m
it’s the job of the Democratic National Ron DeSantis advantage of them. One warning sign
148
Committee to protect the incumbent. Donald Trump for the two front-runners came in a 45
54
The party’s decision to move South Tim Scott Nov. 1 Quinnipiac University poll that
37
Carolina to the front of the primary cal- Nikki Haley gave respondents the added choices of
27
endar should help do just that. Biden is Vivek Ramaswamy Robert F. Kennedy Jr. and Cornel West.
26
popular with the state’s heavily Black Doug Burgum In a four-way matchup, Biden (36%)
11
Democratic voting population, as well Chris Christie eked out a win over Trump (35%),
7
as senior Democratic leaders such as Mike Pence* Kennedy (19%) and West (6%), but with
4
South Carolina Representative James Asa Hutchinson fully a quarter of voters spurning the
Clyburn, a staunch supporter. “The fit *PENCE SUSPENDED HIS CAMPAIGN ON OCT. 28 major candidates. Perhaps the most
DATA: FEDERAL ELECTION COMMISSION
for Biden with the new calendar is obvi- striking finding was that Kennedy, who
ously very good,” Putnam says. has notoriously embraced a series of anti-vaccine conspiracy acy
Even absent this advantage, the likelihood of a popu- theories, won a plurality of independent voters whetherr or
lar Democrat challenging an incumbent Democratic presi- not West was on the ballot.
dent was always slim. Party strategists and elected officials The Cook Political Report’s Walter calls this a clear expres- res-
are still haunted by the memory of Senator Ted Kennedy’s sion of a negative sentiment toward the front-runners that she
primary campaign against President Jimmy Carter in 1980, sees in nearly every focus group of undecided voters. “It was
which weakened Carter before his loss to Ronald Reagan really summed up for me by a guy who said, ‘I regret voting ng
in the fall. for Biden, but I don’t regret not voting for Trump,’ ” she says. s.
Bob Shrum, a veteran presidential strategist who worked With more Americans fed up with the state of the coun--
for Kennedy, disputes that the primary challenge hurt try, the economy and the major candidates, that attitude e
Carter. “It’s a misperception,” he says. “I think Carter would could ultimately carry the day—or at least shape the out--
have lost anyway.” But Shrum says the race is nonetheless come of the race. A year out from Election Day, it’s too o
instructive, because of how the circumstances differ from soon to tell whether Trump or Biden would benefit. (A new w
Biden’s situation. poll from the New York Times/Siena College showed Trump mp
“Democratic senators in 1979 were afraid that if they beating Biden in five out of the six most important battle- tle-
had to run with Carter, they’d lose their seats,” he recalls. ground states by a margin of anywhere from 4 to 10 percent- ent-
“Many of them came to Kennedy and said, ‘Please run.’ ” age points.) What’s clear already are the ample warning signs gns
No one in today’s Senate is encouraging challengers that an election nobody wants could produce an outcome e no
to Biden. The reason no serious candidates have one expects. That may still come as a shock next November. ber.
entered the race, Shrum says, “is because they’ll lose.” But it shouldn’t be a surprise. <BW> �With Bill Allison
46
Bloomberg Businessweek November 13, 2023

LEAVE
thank you for your service
please

As a Covid-era mortgage forbearance program winds down,

lenders are foreclosing on veterans at an alarming rate
By Caleb Melby, Polly Mosendz and Ann Choi
Photographs by Mike Adno
47

S
harelle Rosado didn’t give a lot of loans to postpone payments for a year payments and the payments she’d
thought to the legal solicitations or longer and then, at the end of this skipped would be due when the mort-
piling up at her front door earlier forbearance period, apply to pay the gage was paid off.
this year. She’d recently gotten a speed- arrears over time. About 8.5 million There was one problem: Rosado was
ing ticket and figured lawyers were offer- homeowners availed themselves of the recently divorced, and UWM wanted
ing their services. It wasn’t until she program, including about 445,000 mil- her ex-husband to sign the document,
began opening the letters that she real- itary veterans such as Rosado, a for- too. She and UWM came to an agree-
ized the mail was much more serious: mer Army paratrooper whose loan ment, she says, that her ex didn’t need
Her house was in foreclosure. was backed by the US Department of to co-sign the modification if he would
Rosado is savvy about homeowner- Veterans Affairs. instead sign a quitclaim deed, a docu-
ship. She’s a licensed real estate agent In March 2022, after her 12-month ment confirming he no longer had an
and the one-time star of the Netflix show forbearance ended, Rosado filled out ownership stake in the house. After
Selling Tampa, which Rosado and her home outside Tampa what’s known as a some delay, he signed, and in August
tracked the staff of her loss-mitigation appli- of that year, Rosado sent her signed
all-female, all-Black cation—essentially a agreement along with the quitclaim.
brokerage. Her clients report on her finan- The next month her mortgage payment
count on her exper- cial status, used to of $1,282.77 was posted to her account,
tise. Yet she was bewil- determine her eli- which she took as proof that the matter
dered that her lender gibility for a repay- had been resolved. Not so: She was told
was moving to take her ment plan—and sent it there were still paperwork problems
four-bedroom house to her lender, United with her modification. She says she sent
outside Tampa. Wholesale Mortgage. the quitclaim again.
It turned out to UWM approved her Rosado says she had no idea the com-
have everything to do application and sent pany intended to seize her home until
with a Covid-era mort- her a loan-modification the legal solicitations arrived on her
gage program that agreement , under doorstep in March. After a final failed
allowed borrowers wh i c h sh e wou l d attempt to get her loan modification
with federally backed resume her monthly approved, she faced two unappealing
 Bloomberg Businessweek November 13, 2023

choices: immediately pay more than the mortgage, extending the repayment up, and mortgage companies couldn’t
$45,000 in arrears and fees or lose her period while keeping the monthly cost say no. So lenders and servicers lost a
house. “I was pissed,” Rosado says. affordable; or, as in Rosado’s case, the huge chunk of their primary revenue
“This is embarrassing. I’m not about to arrears would be lumped into a bal- stream, and the legislation contained no
lose my house.” She paid. loon payment due when the mortgage bailout for them. Many were unhappy.
In a written statement, a UWM was paid off. But the government didn’t “It’s frankly frustrating and ridicu-
spokeswoman said the company require lenders and servicers (companies lous that we do not have a solution in
“works hard to assist bor- Bennett and her Coeur d’Alene home that buy and place,” Jay Bray, chief executive officer
rowers, even distressed manage loans) of the lender Mr. Cooper Group Inc., for-
borrowers, in servicing their to approve those merly Nationstar Mortgage, told CNBC in
loans,” but that Rosado’s agreements. Or April 2020. “There is going to be com-
account was incomplete. She to make the pro- plete chaos.” His company had a strong
said the signed agreement cess straightfor- balance sheet, Bray said, but others in
Rosado sent in August 2022 ward and easy. the industry would “start seeing prob-
was an old version, and under Across the lems soon.” (Instead, interest rates fell,
the VA’s requirements she US, about 4,000 millions of people refinanced their mort-
needed to submit a divorce veterans whose gages, and lenders made a lot of money.)
decree in addition to the mortgages had As borrowers began to exit for-
quitclaim. The company said been in the for- bearance, in early 2021, the mortgage
it had “attempted telephone bearance pro- companies needed to help them craft
contact” with her 35 times gram had lost repayment plans, which involved more
last year and 43 times this their homes people, more paperwork and more cost.
year. Rosado says that UWM as of mid- The rollout of those plans was rocky at
didn’t ask her for a divorce decree October, according to ICE Mortgage best. Some borrowers encountered insur-
prior to foreclosing and that she didn’t Technology Inc. Some 6,000 more mountable roadblocks, with their homes
48 receive any voicemails saying her file are in foreclosure; 34,000 others are on the line. Conventional wisdom has
was incomplete. marked delinquent. Not all the fore- long held that lenders prefer what are
At first, it looked as if the entire epi- closure actions were the result of loan- called workouts, such as loan modifica-
sode was an expensive fluke. But Rosado modification denials. But the figures tions, rather than foreclosing on home-
began hearing from friends she’d met don’t include thousands of borrow- owners, which can be time-consuming
while serving at Fort Bragg (now Fort ers, like Rosado, who paid a lump sum, and expensive. But home prices were
Liberty) in North Carolina who were sometimes under duress. skyrocketing, the product of a Covid-
having their own troubles getting their The problem isn’t limited to veterans. inspired desire for more space, histor-
loans modified. They had some things Other homeowners who took part in the ically low interest rates and a flood of
in common, including signs of financial forbearance program have faced similar government money. “Right now, because
vulnerability, such as disability, unem- difficulties. About a half-million of them of the property values, they don’t mind
ployment or divorce. The lenders had
things in common, too: Most were non-
bank companies, which issued more
“If I didn’t have that money, I’d be with some
than 80% of the 746,000 VA loans writ- of those other people, LOSING EVERYTHING”
ten last year. Over the past decade, as tra-
ditional banks have retreated from the are delinquent or facing foreclosure, foreclosing,” Safora Nowrouzi, a lawyer in
$12 trillion US mortgage market, these and an additional 87,000 have lost their California who handles foreclosure cases,
PHOTOGRAPHS BY AMY OSBORNE FOR BLOOMBERG BUSINESSWEEK

lenders, which mostly operate online homes. But the actions against veter- says of lenders. “And that’s why denials
and outside the scrutiny of bank regula- ans are notable given the lengths policy- are much higher.”
tors, have stepped into the void. makers and regulators have gone to get Borrowers, lawyers and advo-
The mortgage forbearance program them into homes and keep them there. cates describe a rudimentary play-
was a feature of the 2020 Coronavirus book: requests for documents that have

T
Aid, Relief and Economic Security Act, he Cares Act, a $2.2 trillion already been submitted, assurances
known as the Cares Act. It covered a economic stimulus bill, was that an application is complete only for
large majority of the mortgages in the rolled out within weeks of the it suddenly to be reopened, envelopes
US, because most mortgages are backed pandemic’s onset. The mortgage for- that don’t contain promised documents,
by federal programs. Loan-modification bearance element in the act was broad loans transferred to different lenders and
agreements typically offered one of two and homeowner-friendly: Borrowers other paper-shuffling moves that force
options: The arrears would be added to didn’t have to prove they were hard borrowers into delinquency, increase
Bloomberg Businessweek November 13, 2023

the size of their arrears and

narrow their options. Borrowers
are “lulled into inaction, because
they’re led to believe that the
lender is working something
out,” Nowrouzi says.
The Consumer Financial
Protection Bureau, which mon-
itors lending practices, says it’s
unable to track how many loss-
mitigation and loan-modification
applications go awry, or how
many are denied. But com-
plaints from service members
prompted the agency and the
US Department of Justice to
issue a warning in December
2021 to lenders and mortgage
servicers citing borrowers who
had “suffered negative impacts.”
The letter described “incorrect
or confusing communications”
and mandatory lump sum pay-
ments as things that could run afoul of going through the loan-modification that she had to pay $15,000 or lose her
protections in the Cares Act. Borrowers process, says of the agency’s reports. home, she says. She didn’t have that
with government-backed loans, the A spokesperson for the CFPB says it much money on hand and forfeited the 49
warning letter said, “generally cannot doesn’t make supervisory interactions house in a short sale in July.
be required to repay their forbearance with companies public. Her home was listed for sale at 53%
amount in a lump sum payment if they Even after everything, Rosado con- more than the price she paid. Rosario,
indicate that they cannot afford to do so siders herself lucky. Her circumstances who now rents across town, says she’s
when exiting forbearance.” had changed since she bought her so wracked with depression that she’ll
The letter doesn’t appear to have had home in 2020—the Netflix show plus a go days without stepping outside. “I still
the desired effect. In a report that cov- recent engagement to former Cincinnati don’t understand how I was expected
ered transactions through March 2023, Bengals wide receiver Chad “Ochocinco” to pay that money so suddenly and
the agency again made clear that some- Johnson—and she could afford the one- continue on with my life,” she says.
thing was amiss. It said it had identi- time payment. “If I didn’t have that “It doesn’t make any sense.” A spokes-
fied lenders that delayed homeowners’ money, I’d be with some of those other person for Freedom, one of the larg-
applications and that “borrowers could people, losing everything,” she says. est originators of VA loans last year,
not reasonably avoid injury because One of those other people is Monica declined to comment.
servicers controlled the processing of Rosario, a retired Army captain. When

S
applications, and borrowers reasonably it came time to modify the loan on omeone who last bought a home
expected servicers to enroll them in the her three- bedroom townhouse in a decade ago would scarcely
options they applied for.” The report Fayetteville, North Carolina, she was recognize the mortgage mar-
didn’t identify any lenders by name, and going through a divorce and between ket today. The changes began with
no enforcement actions were taken. But jobs. The divorce proceedings put her the 2008 global financial crisis, which
the agency said the unnamed companies taxes in disarray, so Rosario, a colon was triggered by risky mortgage lend-
had “ceased the practice and developed cancer survivor, sent bank statements ing practices. In the aftermath, down
improved policies and procedures.” to her lender, Freedom Mortgage Corp., payments once again became stan-
That hasn’t been the experience showing that she was still receiving dard for most conventional mortgages,
of veterans and advocates who spoke disability benefits from the Army and variable-interest-rate loans fell out of
to Bloomberg Businessweek. “Instead was able to make monthly payments. favor with both lenders and borrow-
of bringing attention to the dam- She says the documentation never ers and income-verification standards
age inflicted, it conceals it,” Roberto seemed to stay in her file. Freedom were tightened.
Rivera, a consultant in New Jersey who denied her loan-modification appli- Those reforms also made the busi-
works with attorneys whose clients are cation and told her earlier this year ness of writing mortgages less
 Bloomberg Businessweek November 13, 2023

profitable for banks, which at the time than Wells Fargo, JPMorgan Chase and those phone calls is so sickening,” says
underwrote the majority of home loans. US Bancorp, the top three bank lenders Rivera, the consultant, of calls that cus-
Borrowers with higher credit scores and in 2022, combined. tomers have with their lenders. “There’s
larger down payments can still count on John Bell, who manages the VA’s nobody there who has read the guide-
bank loans; they’re desirable custom- home-loan program, praises the role lines. It’s absurd.”
ers who, in addition to being unlikely to nonbank lenders have played in the Absurd could describe Rosie Bennett’s
default, can be sold on more lucrative VA mortgage business. “Thank good- situation. She got forbearance for the
services, such as wealth management. ness we had some of these nonbanks mortgage on her home in Coeur d’Alene,
For other clients, a new generation of that raised their hand and were want- Idaho, in July 2020, the month before the
companies sprouted up. Nonbanks, ing to get into the business when banks death of her husband, who served as a
sometimes called shadow banks, don’t backed out,” he says. Navy medic in the 1950s. The reprieve
take deposits and are subject to much Many mortgage companies love VA gave Bennett, who’s 79 and has multiple
less regulation. They figured out they loans. They’re backed by the govern- sclerosis, time to settle her affairs.
could make a profit lending to not- ment, the VA doesn’t set minimum In January 2022 her mortgage ser-
quite-prime homebuyers. Of course, credit score requirements, and down vicer, Dovenmuehle Mortgage Inc.,
p ay m e n t s o f t e n mailed her an envelope that she
aren’t necessary. expected to contain her loan-modifica-
Even closing costs tion agreement. But the envelope was
can be borrowed, empty, according to a lawsuit she filed
sending loan-to - against Dovenmuehle in federal court in
value ratios as high Idaho. Bennett says she contacted the
a s 1 03. 3% . T h e company several times to ask for the
result: VA borrowers agreement and was told it would be sent.
often begin home- She continued making monthly pay-
ownership owing ments, but the paperwork never came.
50 more than their In May 2022 the company sent a notice
home is worth, cre- saying Bennett would be foreclosed on if
ating a long earnings she didn’t pay $33,529 within a month.
runway for lenders. Dovenmuehle started foreclosure
Nonetheless, vet- proceedings in June. In October the com-
erans who’d been pany transferred Bennett’s loan to PHH
waved through Mortgage Corp. She says she reached
when they applied a modification agreement with PHH,
for their mortgage only to have it rescinded this January.
found their lend- She was told she “needed to have her
ers weren’t going deceased husband execute and record”
to make things easy a document transferring his owner-
when it came time to ship in the house to her and was again
modify their agree- threatened with foreclosure, according
ments. Lawyers and to the lawsuit, which also names PHH as
housing advocates a defendant.
say that, depending Spokespeople for Dovenmuehle and
on the state, trying PHH say they complied with all applica-
to beat lenders in a ble laws and guidelines. The PHH spokes-
PHOTOGRAPHS BY MIKE ADNO FOR BLOOMBERG BUSINESSWEEK

he-said, she-said bat- person says, however, that the company

the nonbanks need money to run their tle over who dropped the ball in a loan no longer intends to foreclose. Bennett
businesses. They often get it in the form modification can be almost impossible. is pursuing her lawsuit anyway. The two-
of credit lines from many of the same Those who succeed say borrowers must year saga has rattled her. “I’m just such a
banks that pulled back from the messy rigorously document their cases if they nervous wreck right now,” she says. “My
business of underwriting. have any hope of winning. And there’s a whole body is just shaking all the time.”
Last year, nonbanks accounted for growing sense that federal agencies, far One possible takeaway: Choose your
60% of all US home loans. The two big- from preventing abuses, may be mak- lender carefully. But Bennett hadn’t con-
gest, Rocket Cos. and United Wholesale ing things worse with complex rules that tracted with Dovenmuehle or PHH. She
Mortgage, originated more than befuddle lenders as well as borrowers. and her husband had gotten their mort-
$255 billion of mortgage debt—more “The misinformation they’re giving on gage from Federal Savings Bank, based in
Bloomberg Businessweek November 13, 2023

New York. There are no rules preventing risky strategy for any borrower in a fight demands for documentation that Young
banks from selling mortgages or hir- with a lender. In May, Shellpoint moved says she’d already provided, ultimately
ing nonbanks to service them. “This is to foreclose. leading to a foreclosure warning and her
the one consumer contract where you What Rutherford didn’t know was credit score dropping by 111 points.
don’t get to pick who you do business that Caliber and Shellpoint were owned Not all borrowers are meticulous
with,” says Marc Dann, Bennett’s law- by the same company, Rithm Capital record keepers, but Young is. She com-
yer and a former Ohio attorney general, Corp. The paperwork Shellpoint said piled a dossier of all documents and
who now specializes in consumer lend-
ing cases. “She can’t say ‘Oh, I don’t like “The RISK OF BEING SUED and the risk
Dovenmuehle. I’m going to go down the
street to Wells Fargo.’ She can’t do that.” of being dinged by the CFPB is baked into
Settlements from cases such as their business model”
Bennett’s tend to be small, and there’s lit-
tle disincentive to avoid abusing borrow-it couldn’t find existed within the same emails and pulled her phone records to
ers, Dann says. “The risk of being sued corporate family. As he fought to keep show how many hours she’d spent deal-
his home, “Rithm had one of its best
and the risk of getting dinged by the CFPB ing with the company. In June she took
is baked into their business model,” he quarters ever,” its CEO told investors in her case to the consumer protection unit
says. “We could really use another 1,000 August. The company, which has been of the North Carolina Department of
rolling up finance businesses for years,
law firms doing the work that I do. At that Justice, which contacted Mr. Cooper. In
point, maybe we would have an impact is now closing in on an acquisition of a letter, the company told the agency it
on the behavior of these companies.” Sculptor Capital Management, a $33 bil- had tried to reach Young on several occa-
lion hedge fund. sions and that she hadn’t responded. But

L
ewis Rutherford’s maddening “Something ain’t right with these peo- Young sent her phone logs to state offi-
journey to a foreclosure notice ple,” Rutherford says. “If they see an cials in an email describing Mr. Cooper’s
began more than a year ago. A opportunity to snatch a house, they will.” description of events as “misleading
63-year-old truck driver who played He says that in June, after he told and inaccurate.” 51
keyboards in bands at US Army bases Shellpoint he’d spoken to Businessweek, It worked. In a new letter, Mr. Cooper
across Europe in the 1980s, Rutherford the company said it didn’t need to fore- described Young’s efforts to get her loan
hadn’t always paid his mortgage close on him after all. Court records modified and erased its claims that she’d
on time. After exiting forbearance, show the company withdrew its fore- been delinquent, which restored her
he thought he could Young and her Charlotte home closure case a week later. credit score. A spokeswoman for Mr.
avoid future problems A spokesman for Rithm’s Cooper says Young’s application ulti-
by sending money in mortgage division says mately was denied after all documenta-
advance to his lender, the company made an tion had been received. The company
Caliber Home Loans error in how it applied “is committed to finding solutions to
Inc. But when he sent Rutherford’s advance keep our customers in their homes” the
$3,333 in August 2022 payments. “We have spokeswoman said.
to cover three months since corrected this error “I’m going to make sure they inves-
of payments for his and are actively address- tigate every single case,” Young says.
home in New Castle, ing any potential credit She’s been documenting her efforts on
Delaware, about $2,500 reporting impact caused Facebook. One post highlights the por-
appeared to go missing. by this issue,” the spokes- tions of Mr. Cooper’s letter that por-
Rutherford was irate man said. “In addition, we trayed her as a nonresponsive customer
and refused to make are ensuring that no other and an amended letter showing she had
additional payments borrowers were negatively in fact been in frequent contact with
until the matter was resolved. In March, affected by this issue.” them. And there’s a tearful video after
before he could get to the bottom of In Charlotte, Makeda Young, a major Mr. Cooper relented.
it, Caliber sold his loan to Shellpoint in the National Guard who’s studying to The replies show how common the
Mortgage Servicing. Rutherford says a be a physician assistant, took matters into problem has become. “Dealing with
Shellpoint representative told him the her own hands. She says she paid more this RIGHT NOW!!!” wrote one bor-
company had no record of his advance than $19,000 to clear her forbearance rower. “This just HAPPENED TO ME!!!!”
payments. With his money still missing, arrears after delays by her lender, Mr. posted another. “My folks in NC whom
Rutherford insisted he wasn’t going to Cooper, pushed her into default. Records are Veterans are going thru the almost
make any additional payments until the show her application for a modification same scenario real time. Thank you Sista!
matter was straightened out. That’s a was accepted three times, followed by ARMY STRONG!” <BW>
 P
all your
kle

se
ns and maybe even
tic

67 treats that will

es
—
U
nd
ou
ef
W

em
nd th

R
s c e
tran

S
U
I
T
S 53
a
ak
os
Ta

By Sh
tlin

Kristen irley
Ka

by
Ph
g

ot November 13, 2023

th
stylin

og
ra a be Ren Edited by
ph iz str
s by El om
James Gaddy

op
Businessweek.com

Pr
 HOLIDAY GIFT GUIDE Bloomberg Pursuits November 13, 2023

FROM PREVIOUS PAGE:

HERMÈS TRI MAILLON

GLOVES
The pattern on these knit
cashmere gloves is the
French maison’s signature
e r
Chaine d’ancre motif, eth
tog

ugh
composed of interlocking
links. A matching beanie

thro
and scarf complete the
look. $495; hermes.com

DYSON ZONE
ers
ABSOLUTE+
ng
HEADPHONES
ur fi
Ergonomically designed yo
ear cups mean a listener
run
can comfortably handle
e to
someone? Try a gift

all 50 hours of noise-

canceling bliss on each xtur
e
wit

charge. A removable
ti le t
h

tac
travel visor purifies the
air. $800; dyson.com

LYSÉE MILK
CHOCOLATE-BANANA
COOKIE
Rich Valrhona milk
chocolate chips and Want to cozy up to
banana caramel make
these cookies extra
indulgent. A sprinkling
of Maldon sea salt adds
54 a savory finishing touch.
$5 each; lyseenyc.com

MOSCOT GROBER SUN

SUNGLASSES
The transparent frames,
made from Italian
acetate, have small, silver,
diamond-shaped rivets,
but the navy lenses
are what give these
sunglasses a stylish and
playful quality. $350;
moscot.com

MAISON FRANCIS
KURKDJIAN
EAU DE PARFUM
The new Aqua Media
Cologne Forte blends
musk, verbena and
Calabrian bergamot in a
fresh, lively scent. The
brilliant green bottle will
stand out in any collection.
$235; franciskurkdjian.com

SYDNEY EVAN
TALISMAN
MULTICHARM
NECKLACE
Each charm on this
necklace is a meaningful
talisman. There are
CREDITS CREDITS CREDITS

flowers for good luck,

evil eyes for protection,
the hamsa hand for
happiness and a moth for
transformation. $15,730;
sydneyevan.com
 HOLIDAY GIFT GUIDE Bloomberg Pursuits November 13, 2023

CARTIER C
DE CARTIER BAG
The rich embroidery on
this bag is a subtle Cartier
monogram of interlocking
C’s that appears in the
gold-toned clasp, too. The
faceted links on the chain
recall the brand’s jewelry.
$2,950; cartier.com

LORO PIANA
COCOONING SLIPPERS
Knit booties are
the ultimate winter
indulgence for toasting
the frostiest toes. These
feet warmers are made
from natural cashmere
yarn and have thin rubber
soles to prevent slips.
$1,075; loropiana.com

KHAITE RIVER PUMP

Shearling and mesh are
an unusual combination,
but Khaite pairs them
perfectly in these pumps.
The shearling outlines the
feet, which peek through
the pointed black mesh
shoes. $1,100; khaite.com

FENDI PEEKABOO
ISEEU BAG 55
Fluffy gray shearling
adds unexpected visual
volume to Fendi’s petite
Peekaboo bag. The
handle and removable
strap are crafted
from matching Nappa
leather. Gold hardware
secures the two inner
compartments. $4,800;
fendi.com

LOUIS VUITTON MEN’S

COMFY BEANIE
This off-white beanie is
ready for snowy days
and ski trips. The soft
wool blend of the hat
contrasts with the rib-
knit hem, adorned with a
matching Epi LV patch.
$480; louisvuitton.com
PREVIOUS PAGE: WRAPPING PAPER ILLUSTRATION BY MANON CEZARO

DIOR GLOVES & SCARF

Your friend will stay
warm—and chic—with
Dior’s Tribales long
gloves and 30 Montaigne
scarf. White resin pearl
buttons adorn the
elbow-length lambskin
gloves in a luxurious
CREDITS CREDITS CREDITS

flourish; the black-and-

white houndstooth scarf
bears the Christian Dior
logo on each end. $1,150
(gloves), $1,600 (scarf);
dior.com
SECTION Bloomberg Pursuits Month 00, 2023

ng
e rni gift choices; an unexpectedly
c
dis

delicious
t your
jus
dish
than can

Aim to be known for more

scream
te!”
“tas

as
we
ll

CREDITS CREDITS CREDITS

 GIFT GUIDE Bloomberg Pursuits November 13, 2023

DOM PÉRIGNON ROSÉ VINTAGE 2009

A warm summer and perfect harvest conditions
created an exceptionally rich, fruit-forward
Champagne with notes of rose, raspberry, cassis
and fig. After 12 years in the cellar, it’s ready to
enjoy. $465; domperignon.com

FISH DESIGN BY GAETANO PESCE BABEL

ICE BUCKET
This elegant ice bucket is crafted from soft resin,
so it won’t chip. And it’s large enough to hold two
bottles. $495; comingsoonnewyork.com

LAWN BOWLS
Funny faces, a handcrafted feel and brilliant colors
make these bowls ideal for a relaxed dinner party.
Choose from a selection of cheerful grins or food
motifs. $165; comingsoonnewyork.com

LA ROMAINE EDITIONS BUBBLED WINE GLASS

Each glass is handblown in Biot, France,
by a master glassmaker using traditional
techniques. The bright hues add a lively twist.
$45; comingsoonnewyork.com

GLENMORANGIE A TALE OF TOKYO WHISKY

Glenmorangie is using Japanese Mizunara oak
casks—revered in whisky production—for the first
time here. Bright pepper and orange zest combine
with sweet oak flavors. $110; drizly.com

CAVIAR RUSSE CASPIAN GOLD OSETRA

CAVIAR AND MOTHER-OF-PEARL PLATE
Elevate the experience with Caspian Gold Osetra,
noted for its unique color and rich flavor. The 57
Essential Collection includes blinis, crème fraîche
and mother-of-pearl utensils. $545 (Essential
Collection), $125 (plate); caviarrusse.com

BACCARAT CAVIAR BOWL

Philippe Starck brought his sought-after design
expertise to the timeless Talleyrand collection
in this “Comme de l’Or Noir” caviar bowl. It’s
made to serve caviar at the proper temperature.
$800; baccarat.com

WATERFORD LISMORE CAKE PLATE

Takes center stage on any table. $325; waterford.com

VOLCAN X.A
This blend of reposado, añejo and extra añejo
tequilas is so smooth, it will convert even the
most fervent agave skeptic. Created without
any additives, it has notes of vanilla and spices.
$175; reservebar.com

RALPH LAUREN HOME STIRLING

DOUBLE-OLD-FASHIONED SET
The sharp crystal cuts on these glasses are inspired
by pleats on Ralph Lauren tuxedo shirts; get these
for the dandy in your life. $165; ralphlauren.com

VIA CAROTA WHITE NEGRONI

Let your loved ones savor some of New York’s top
craft cocktails with the cult restaurant’s bottled
mixes. The White Negroni is herbaceous and floral,
a lighter take on the tipple. $39; drinkviacarota.com
CREDITS CREDITS CREDITS

ISLAND CREEK OYSTERS

Impress your friends with these briny oysters from
Duxbury, Massachusetts. They have a sweet finish
that entices chefs nationwide. Serve with lemon
to appreciate the complex flavor. $133 for 50;
islandcreekoysters.com
 them step quietly
Don’t let

in
to
t he
ne
w
year!

These gi
fts
an
no
un them
ce
s elve
s wit
h ightf
de
l

noise
ul

58

WITTNER METRONOME MONTBLANC MTB 03 IN-EAR YOTO MINI SYDNEY EVAN WHISTLE CHARM
Practice sessions can get a touch of HEADPHONES This audio player is easy for children This diamond-encrusted whistle is
class with a traditional metronome. The German brand’s rounded star to use. They simply insert a card (a playful and practical: Blow it, and it
Wind it up and watch the pendulum makes these stand out in a sea of starter pack of six is $10), and it plays actually trills, to catch the attention of
swing from side to side in a handsome white earbuds. The headphones offer an audiobook, music or educational a rambunctious group—or bring the
wooden case. $187; amazon.com up to six hours of noise-canceling audio over the speaker. There’s a jack focus to this piece of sideline bling.
listening. $405; montblanc.com for headphones, too. $70; yotoplay.com $2,805; sydneyevan.com
BREGUET CLASSIQUE
RÉPÉTITION MINUTES BOWERS & WILKINS PX8 PAUL MORELLI MEDITATION MARSHALL MIDDLETON SPEAKER
Historically used to tell time in the HEADPHONES BELL AND CHAIN A dust- and water-resistant speaker
dark, this minute repeater watch can Audiophiles will geek out over the They’ll love the calm this meditation is great for those on the go. This
chime the hours and minutes with 24-bit high-resolution sound quality bell conjures. The teal enamel bell one offers 20 hours of playback on
the press of a button, paying homage in these wireless cans. The luxurious has a functional white gold clapper a charge and a convenient handle,
to one of the many horological burgundy color and gold-toned that chimes as it moves, reminding its and it can be combined with other
inventions of Abraham-Louis Breguet. accents mean they look as good as wearer to stay present. $5,400 (bell), Middleton speakers for larger
$249,800; breguet.com they sound. $699; bowerswilkins.com $7,600 (chain); paulmorelli.com gatherings. $300; store.moma.org
 an aura
that offer
of

wa
rm
th
an
ts dl
gif ux
ur
atic
Arom y

59

WINSTON FLOWERS BRIONI EAU DE PARFUM ESSENTIEL THE SANT AMBROEUS BY FENTY PARFUM BODY CREME
ARRANGEMENT The legendary label’s earthy and LE LABO CANDLE This thick body cream will soothe
Three types of roses, Liberty and woodsy new fragrance is fittingly Bringing together two New York dry winter skin. The rich moisturizer,
mini red amaryllis, and beautiful crafted from ingredients that are City legends for a limited-edition including seven conditioning
Clooney ranunculus bring nearly 100% natural. It comes in a handsome project, Le Labo has paired its essential oils, has a heady
every shade of red to the festive Italian glass bottle with a satin label. famed Santal 26 fragrance with the floral scent with hints of spice.
Ruby Radiance arrangement. $500; $145; so-avant-garde.com restaurant’s signature pink hue. $86; fentybeauty.com
winstonflowers.com $92; santambroeus.com
L’OBJET OH MON DIEU INCENSE TOM DIXON ELEMENTS DIFFUSER
BACCARAT EYE OVAL VASE HOLDER & NO. 69 INCENSE ORIBE HAIR & BODY OIL A fresh ocean scent will transport
A bold new color gives Baccarat’s Although unexpected, this surrealist, The Côte d’Azur Luminous hair & your gift recipient to the tropics,
Eye vase a makeover in pink. It’s lip-shaped porcelain incense holder body oil pulls double duty. The light even in the depths of winter.
perfectly sized for a small bouquet also somehow seems totally natural. but nourishing formula moisturizes The Water fragrance also has notes
of flowers or even just a single stem The Japanese incense has sultry both dry ends and parched skin of watermelon and cedar that
plucked from the garden. $1,450; notes of cognac and leather. $70 and exudes a delicate jasmine and diffuse through a thick charcoal
baccarat.com (incense), $95 (holder); l-objet.com sandalwood fragrance. $75; oribe.com reed. $180; tomdixon.net
 HOLIDAY GIFT GUIDE Bloomberg Pursuits November 13, 2023
attention

to be the center of
l
ea

fo
SUPER SMALLS SUPER VISION i d

r
are

th
KALEIDOSCOPE
ms

os
Little ones will be entranced by this
te

e
sparkling kaleidoscope, which comes i
ing

wh
with two interchangeable wands full
h
atc

od
of glitter, beads and metallic confetti.
$34; supersmalls.com
e-c

es
Ey

er
BULGARI ALLEGRA NECKLACE

ve
An array of colorful gems in different
cuts, including amethysts, peridots
and blue topazes, sets this geometric
necklace apart. Each sits between
two diamond-set triangles; at the
center there’s a heart-shaped pink
tourmaline. $136,000; bulgari.com

PRADA SYMBOLE SUNGLASSES

Sunny yellow frames add a modern
touch to the popular ’90s silhouette,
as does the production: Prada crafts
the frames from recycled bio-acetate
as part of its sustainability strategy.
$520; prada.com

LEICA SOFORT 2
Photographers and partiers alike
will adore this hybrid camera, which
takes great pictures using the
brand’s superb optics and then lets
your friends print their favorites on
demand—even from their phone.
$389; leicacamerausa.com

60 VACHERON CONSTANTIN
TRADITIONNELLE TOURBILLON
This elegant watch showcases a
hypnotic tourbillon with a cage
inspired by the Maltese cross. The
bold green dial and matching strap
add a bit of playfulness. Price on
request; vacheron-constantin.com

TIFFANY & CO. BROOCH

The Schlumberger by Tiffany & Co.
Bird on a Rock brooch is one of the
jeweler’s most beloved pieces. This
clip features a diamond-set bird
perched on a 20-carat tanzanite.
Price on request; tiffany.com

YINKA ILORI HAPPINESS CANDLES

These candles miniaturize the
colorful legs of artist Yinka Ilori’s
Types of Happiness chairs. Each
has two alternating colors and a
contrasting base. They’ll light up any
room. $40; store.moma.org

PATEK PHILIPPE REF. 4997/200R

Artisans applied more than 50 layers
of translucent purple lacquer to this
watch’s embossed dial to achieve
its beautiful color. It’s accentuated
by a warm rose gold case set with
76 diamonds. $38,440; patek.com

LOEWE INFLATED CAT EYE

CREDITS CREDITS CREDITS

SUNGLASSES
Loewe reinvents cat eye sunglasses
with an exaggerated design. The
dusty-pink frames have a cartoonish
shape that will surely draw a
double-take. $360; loewe.com
 HOLIDAY GIFT GUIDE Bloomberg Pursuits November 13, 2023

61
CREDITS CREDITS CREDITS
 SECTION Bloomberg Pursuits Month 00, 2023

QUARTZ CLUSTER
Clear quartz is known as a master
healing stone that helps people find
clarity and balance their chakras.
$59; theevolutionstore.com

SYLVA & CIE JADE BANGLE

This stone has strong associations
with health, abundance and luck.
Made from green jade, the bracelet
is studded with 7.72 carats of rough-
cut diamonds set in yellow gold.
$24,375; augustinaleathers.com

VAN CLEEF & ARPELS VINTAGE

62 ALHAMBRA NECKLACE
The four-leaf clover has been the
jeweler’s good luck charm since 1968.
This necklace features 20 of them
in carnelian or engraved rose gold.
$20,500; vancleefarpels.com

RAW ROSE QUARTZ

Rough-cut crystals purportedly
keep more of the stone’s energetic
properties than tumbled or polished
Elevate your loved
ones to a

pieces. These hunks of raw rose

quartz are said to promote self-love,
good relationships and healing.
$6 each; crystalmagic.com

PURPLE AGATE BOOKENDS hig

ne

Whether they’re intended to corral he

a book collection or merely be r
pla

displayed as striking objets d’art,

these bookends hold up. Purple agate
is thought to enhance mental clarity
and increase concentration. Similar
styles from $150; astrogallery.com

CHANEL COMÈTE CHEVRON

BRACELET
A loved one can make a wish on a
shooting star every time they glance at
this timepiece. The bracelet features a
diamond-set flying comet that wraps
around the wrist. $15,950; chanel.com
MARLO LAZ JE PORTE BONHEUR CHOPARD L’HEURE QUARTZ GEODE
FOUNDRAE KARMA MEDALLION DIAMOND CUFF DU DIAMANT WATCH Each of these quartz geodes contains
Good karma will be close to their This 14-karat yellow gold bracelet The lapis lazuli dial of this bright a host of glittering crystals, earning
heart with this medallion. It has the says “Je Porte Bonheur,” which watch is surrounded by 4.26 carats of the moniker “the mother of all
number 8 at the center—signifying translates as “I bring good luck”— diamonds and paired with a matching crystals.” They’re also one of a kind.
the circle of energy or infinity— always a welcome courtesy. Also blue strap. Lapis lazuli is believed to Consider them great decorative
surrounded by a star, crescent moon welcome? The single diamond at the increase self-awareness and protect pieces for your spiritual friends.
and diamond. $3,950; foundrae.com center. $6,900; marlolaz.com against evil. $44,900; chopard.com $264; the8thdrifter.com
SECTION Bloomberg Pursuits Month 00, 2023

63

ORLY MARCEL LARGE HAMSA AMETHYST CLUSTER JENNIFER MEYER GOOD LUCK TERRA SOLEIL LUNA SOLEIL
GOLD AMULET A violet variety of quartz, amethyst NECKLACE TAROT DECK
The Hamsa is a token of protection is revered worldwide for its healing Symbols of luck and good fortune Help them explore their mystical
in many cultures. This necklace and calming properties, which are abound on this diamond-set necklace. side with these astronomy-inspired
features an 18-karat yellow gold said to be helpful during meditation It has talismans from around the tarot cards. Each features a beautiful
hand with a sugarloaf cabochon or periods of high stress. This world, including an elephant, an evil design blending celestial bodies with
emerald at the center of the palm. petite cluster easily fits on a desk. eye, a horseshoe and a four-leaf symbols in a black-and-gold color
$7,200; orlymarcel.com $20; energymuse.com clover. $11,000; jennifermeyer.com scheme. $70; terrasoleil.com
 ◼ LAST THING

Bloomberg Businessweek (USPS 080 900) November 13, 2023 (ISSN 0007-7135) S Issue no. 4804 Published weekly, except one week in February, April, May, June, July, August, September, October and November by Bloomberg

address changes to Bloomberg Businessweek, P.O. Box 37528, Boone, IA 50037-0528. Canada Post Publication Mail Agreement Number 41989020. Return undeliverable Canadian addresses to DHL Global Mail, 355 Admiral Blvd., Unit 4,
L.P. Periodicals postage paid at New York, N.Y., and at additional mailing offices. Executive, Editorial, Circulation, and Advertising Offices: Bloomberg Businessweek, 731 Lexington Avenue, New York, NY 10022. POSTMASTER: Send

Mississauga, ON L5T 2N1. Email: contactus@bloombergsupport.com. QST#1008327064. Registered for GST as Bloomberg L.P. GST #12829 9898 RT0001. Copyright 2023 Bloomberg L.P. All rights reserved. Title registered in the
U.S. Patent Office. Single Copy Sales: Call 800-635-1200 or email: bwkcustserv@cdsfulfillment.com. Educational Permissions: Copyright Clearance Center at info@copyright.com. Printed in the U.S.A. CPPAP NUMBER 0414N68830
An Eras Tour
No businessperson—and arguably no human other
than Taylor Swift—commands as much attention as

Of Elon Musk
Elon Musk. His domain encompasses six companies,
a net worth in the hundreds of billions and an elite-
level social media addiction. Musk’s ever-expanding
universe is the subject of a new Bloomberg
● DREAM WEAVER, 2015 Businessweek podcast, Elon, Inc. It’s also a topic
Tesla was bleeding money and this magazine has studied closely over the years.
SpaceX’s near-bankruptcy was still
recent history, but neither of those
things seemed to matter to Musk’s ● THE BATTLE TO OWN THE SUN, 2016
rapidly growing customer base, as Years before Musk challenged Mark
Ashlee Vance reported. If anything, Zuckerberg to a cage match, claiming he
Musk’s manic intensity and risk-taking was an expert in “no rules streetfighting,” our
were becoming central to his myth. art directors imagined a metaphorical cage
“The harder it gets,” a friend told fight between Musk and Warren Buffett,
Vance, “the better he gets.” whose Nevada utility was blocking the
growth of Musk’s solar company. At the time,
Musk’s allies included prominent liberals,
including actor and climate change activist
Mark Ruffalo.
● INFRASTRUCTURE WEEK, 2017
Having enjoyed a close relationship
with the Obama administration, Musk
seemed to seek some surprising
common ground with Donald Trump.
Shortly after the 2016 election, ● PRODUCTION HELL, 2018
amid promises of major spending After unveiling the Model 3, Musk’s first
on infrastructure, Musk announced mass-market EV, Tesla took hundreds
he was going into the tunneling of thousands of reservations from eager
business. The Boring Co. is still customers. Then came the hard part:
digging, but the Trump bromance actually making the cars. Musk bragged
lasted only a matter of months. about working around the clock,
employees complained about factory
64 conditions, and investors questioned
Tesla’s viability. Musk summed up the
● PRODUCTION HEAVEN, early 2020 vibe in an interview: “We were huge idiots
Short sellers bet heavily against Tesla as and didn’t know what we were doing.”
Musk sought to expand production. He
took the other side of the bet and won
big. Today the company’s Model Y, the
SUV that followed the Model 3, is among
the best-selling cars in the world.
● THE HEEL TURN,
mid-2020
How did the American
left’s favorite capitalist
turn into a Covid-denying
anti-vaxxer? Blame
stay-at-home orders,
which threatened to
● “I LOVE CHINA,” 2021 slow down Tesla and
Musk has always been a savant seemed to trigger Musk’s
when it comes to extracting contrarian tendencies.
subsidies from world leaders, a
talent that served him especially
well in China during the world’s
strictest Covid-19 lockdowns. Tesla
reopened more quickly than its
● THE EDGELORD PIVOT, 2022
rivals, secured hundreds of millions
Was Musk serious when he
in loans from state-backed banks
offered $54.20 a share to buy
and was able to sell in the country
Twitter? The answer turned
without teaming up with a locally
out to be yes and no. Yes, the
owned car company. Win-win.
offer/weed joke was real. No,
there was no real plan to make
the acquisition pay off.
● ELON, INC., 2023
Musk’s achievements and
antics make for great copy, but
they’re increasingly shaping the
world. What better way than
a weekly podcast to capture
this conversation? Subscribe
wherever you listen!
PUT AI
TO WORK
WITH
SERVICENOW
Everyone’s talking about Gen AI. Thing is, you don’t just
want Gen AI. You want enterprise-ready AI for your entire
organization. But where do you even start?

The ServiceNow® platform brings intelligence into every

corner of your business. Reaching horizontally across
departments, disciplines, and silos. So every system,
every process, every app — everything — works better.
Empowering your people to be exponentially more
productive. To do things they could never do without it.
Not next year. Now.

It’s time to put AI to work. With ServiceNow, it’s not just

possible. It’s happening. Helping businesses everywhere
say yes to entirely new ways of working.

ServiceNow.com/GenAI

© 2023 ServiceNow Inc. All rights reserved.*

dior.com – 800.929.dior(3467)