BONO

APRIL 1, 2016 FORTUNE.COM

TIM COOK
AUNG SAN SUU KYI
STEPHEN CURRY
RUTH BADER GINSBURG
JOHN OLIVER
NIKKI HALEY
MARC BENIOFF
POPE FRANCIS
JEFF BEZOS

How Hes
Leading
the Fight
Against
Poverty
p. 94

The
Worlds

50
Leaders
greatest

p. 67

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Stay, but
move up.

April 1, 2016 Volume 173 Number 5

ginsburg: nik k i k a hnthe washington post/gett y im ages; k elly a nd kor nienko: nasa v i a a p; gates a nd desmond-hellm a n n: joe puglieseaugust im ages; gr iest a nd h av er: jessica mcgowa ngett y
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features

The Worlds
50 Greatest
Leaders
67
This election year has
given us a taste of what
leadership is, mostly
through its absence.
Demagoguery, pandering,
even populism arent
leadership. Heres what is.
By Geoff Colvin

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

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

94
I Will Follow

Book Excerpt:

108

My Year in Startup Hell

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

ON T H E C OV E R :
B ONO PHO T O GR A PH E D B Y SAM JONES
J E F F BE Z O S PHO T O GR A PH E D B Y WESLEY MANN

Irish rock icon Bono leads a

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

FORTUNE.COM

April 1, 2016 Volume 173 Number 5

departments

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

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

FORTUNE.COM

22
Worlds Most
Admired Companies
Netix is on a growth
streak, but the stock has
been volatile. Heres why.
By Lauren Silva
Laughlin

Tech

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

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

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

invest

pursuits
34
Smart Travel
The best apps for
summer trips.
By Christopher Tkaczyk
36
Black Book
An insiders guide to
So Paulo.
By Adam Erace

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

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

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

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

sh a r p: k endr ick br inson

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

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

editors desk

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

FORTUNE.COM

April 1, 2016

her. Then theres Ted Cruz,

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

have that key quality of empathy essential for todays

challenges. From the business world, weve included
Salesforce CEO Marc
Benioff, who recognizes that
the current political climate
also demands a different
kind of business leadership
and a more compassionate
form of capitalism. Indeed,
in all walks of lifefrom
Lin-Manuel Miranda on
Broadway to Larry Fink
on Wall Street to Stephen
Curry on the basketball
courtgreat leadership is
thriving. Our list starts on
page 67. Not everyone will
agree with all of our selections, but I have no doubt
youll nd them inspiring.
A nal word on our rst
choice, Amazons Jeff Bezos.
His company got pummeled
in a New York Times story
last year depicting Amazon
as a sort of high-tech sweatshop, where the pressure
caused workers to break
down at their desks in tears.
As Adam Lashinskys prole
shows, Bezos certainly
places heavy demands on
his people, and its unlikely
Amazon will ever show up
on our 100 Best Companies to Work For list. But
leadership comes in various
avors, and the Bezos strain
is yielding world-changing
results. A surprisingly
capable leader has been
at the center of them.

alan murray
Editor
@alansmurray

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

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

APRIL 1, 2016

Macro
CL OSER L OOK

Once upon a time in the land

of the free,
The IRS gathered trillions
from you and me

NOTE: ALL DOLLAR VALUES ARE ADJUSTED

FOR INFLATION, WITH 2016 AS THE BASE
YEAR. ALL YEARS ARE IRS FISCAL YEARS
(OCT. 1 TO SEPT. 30).

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

A series of
unfortunate
events

FORTUNE.COM

THIS IS A STORY about the

Internal Revenue Service, an

84,000-employee government agency with a job
thats as vital as it is hard to
lovesecuring the trillions of

dollars in taxes that make the

government run. And these
days, its an agency down on
its luck: plagued by angry
politicians, frustrated taxpayers, hordes of identity thieves,

APRIL 2006

FEBRUARY 2010

OCTOBER 2012

MAY 2013

The IRS declares its

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

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

Hackers breach South

Carolinas Department of Revenue,
stealing data on
nearly 4 million taxpayers who led their
returns electronically.
The state blames the
IRSs lax encryption
policies.

Scandal erupts when

an IRS ocial admits
to targeting Tea Party
groups for additional
inspectionprompting national outrage.

illustr ation: rya n snook

THE RECENT TRAVAILS OF THE IRS

ARE A MODERN-DAY FABLE FOR WHAT
HAPPENS WHEN THE GOVERNMENT
FAILS AT TECHNOLOGY.

But the taxmen were

cash-strapped,

And the people got angry.

Be right with you, they were told.

Their coffers were bare.

They had no money for staffing,

There were hacks,

there were scandals,

Tech upgrades were rare

And lots of waiting on hold.

andmore recentlyhackers.
The IRSs latest and perhaps most spectacular foray
into disaster was an online
feature called Get Transcript.
The tool, which for the rst
time allowed taxpayers to
download their records directly from IRS.gov, was supposed to be the happy ending
to the decades-long struggle
to bring the IRSs J.F.K.-era
legacy technology into the

Internet age. But in February

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

fraudulently generate PINs

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

whicheven as annual tax

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

JUNE 2014

JANUARY 2015

MAY 2015

DECEMBER 2015

FEBRUARY 2016

FEBRUARY 2016

The IRS says it cant

provide emails relating to the Tea Party
audits because they
were destroyed in a
computer crash.

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

The IRS announces

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

An IRS employee who

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

The IRS discloses

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

The IRS announces

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

MACRO

battery of threats for more

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

10

FORTUNE.COM

ELECTION 2016

THEIR TAX PLANS, YOUR PAYCHECK

WE WILL RAISE TAXES.

YES, WE WILL. BERNIE SANDERS

BERNIE SANDERS IS VYING to become the rst major party

candidate running on a soundly pro-taxes platform

since Walter Mondale. Sanders plan would lower aftertax income for the upper income quintile by 17%a
stark contrast to Ted Cruzs plan, which would raise it
by 14% (and raise the decit $29 trillion by 2036). Hillary
Clinton, meanwhile, would keep things about the same.

THE MOST IMPORTANT TAX REFORM

WE CAN DO IS ABOLISH THE IRS. TED CRUZ
15%

CRUZ

10
TRUMP

5%
0

CLINTON

5
10
15

CHANGE IN AFTER-TAX
INCOME UNDER CANDIDATE
PROPOSALS

Under Sanders plan, someone

making more than $142,600 a year
would take home 17.2% less.

SANDERS

20%
$0
INCOME BRACKETS

$23,099

IRS just 40 per transcript

request, compared with
$45 to $55 per document
requested the old-fashioned
way. Multiplied by the
23 million transcripts
ordered online last year,
the savings was more than
$1 billion annually. The IRS
fast-tracked development,
rejecting IT proposals for
greater antifraud provisions
such as facial recognition.
We were robbing our own
cybersecurity budget for
Get Transcript, says one
former IRS official.
It also didnt help security
that the programs had to be
customer-friendly. In both
recent attacks, thieves came
in through the front door
using the very same ID system taxpayers were supposed

April 1, 2016

$45,153

$80,760

$142,601

SOURCE: TAX POLICY CENTER

to use. They stormed the site

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

Acquiring the tech

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

Florence Griffith Joyner (Flo-Jo) celebrating her victory

A lifetime of dedication,
for a moment of victory

Focus Persevere Breakthrough

MACRO

GROCER
E X AGGER ATION

SHOPPERS
LIKE ORGANIC
FOOD A LOT
MORE THAN
SCIENTISTS
CONSUMERS

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

IN MEMORIAM

THE IMMIGRANT
WHO CREATED
SILICON VALLEY
ANDY GROVE FLED NAZI-OCCUPIED HUNGARY,
REINVENTED INTEL, AND USHERED IN A TECH
REVOLUTION THAT CHANGED THE WORLD.

12

FORTUNE.COM

April 1, 2016

business leader. He
wrote gracefullyin
Fortuneabout his
battle with prostate
cancer. He mentored
Intels leaders as well
as entrepreneurs
outside Intels walls,
including Steve Jobs.
The epitome of
an American success story, Grove
was profane, direct,
argumentative, and
full of mirthoften in
one breath. His death
is a reminder of a time
when Silicon Valleys
disruptive products
were tangible, life
changing, and technically brilliantif
sometimes awed.
That description
isnt a bad epitaph
for Grove himself.
Intel was famous
for a copy exactly
manufacturing process. Its great leader
was one of a kind.
ADAM LASHINSKY

JOHN KELL

grov e: ben ba k err edu x; v egeta bles: br igitte spor r ergett y im ages

His death is a reminder

of a time when Silicon
Valleys disruptive
products were tangible,
life changing, and
technically brilliant
if sometimes flawed.

HOW DID Andy Grove

make Silicon Valley
what it is today? Let
us count the ways.
A brilliant polymath
with a Ph.D. in chemical engineeringhe
was Dr. Grove when he
wasnt simply Andy
the longtime Intel CEO
and then chairman
taught the nerds
about the importance
of marketing. The
public craved Intel
Inside for reasons

it never could have

articulated beyond
Intels ubiquitous and
convincing advertising. Grove helped
popularize cubicle
culture: If someone
as mighty as the
immigrant-turnedtechnology-titan
didnt rate an oce,
neither did you. He was
the rare technologist
who thrived as a business leader, a master
strategist, and a
popular explainer of
his hard-won wisdom.
Only the Paranoid
Survive educated a
generation of business leaders in the
language of market
analysisthe strategic inection point
and in how to navigate
the proper course
through a crisis.
Grove, who died at
his home in Los Altos,
Calif., on March21 at
79, was more than a

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

MACRO

GAMES WON per every

$100 million spent on
annual compensation

LEICESTER CITY
26 WINS PER
$100 MILLION SPENT

WEST HAM UNITED

13/$100M
13 GAMES WON

18 GAMES WON SO FAR

THIS SEASON

TOP 10 TEAMS IN THE

PREMIER LEAGUE

MANCHESTER
UNITED
5/$100M

SOUTHAMPTON
14/$100M

13 GAMES WON

12 GAMES WON

LIVERPOOL
6/$100M
12 GAMES WON

TOTTENHAM
10/$100M

ARSENAL
6/$100M

16 GAMES
WON

15 GAMES
WON

STOKE CITY
12/$100M
12 GAMES WON

MANCHESTER
CITY
5/$100M
15 GAMES WON

CHELSEA
3/$100M
10 GAMES
WON
UNDERDOGS

The Miracle
of Leicester City
A SMALL ENGLISH SOCCER TEAM IS STORMING
THE BIG LEAGUES ON A SHOESTRING BUDGET.

By Geoffrey Smith

NGLANDS RICH have had

50 years to digest the Beatles
message that money cant buy
them love. But the Gulf sheikhs,
the Russian oligarchs, and U.S.
private equity wizards who own
the bulk of Britains top soccer teams are now
having to learn another bitter lesson: It cant even
buy you success.
The clear leaders of the English Premier
League as the season enters its nal leg arent either of the mighty Manchester clubs, United and
City (annual revenue: $568 million and $507 million, respectively, according to Deloitte), nor
defending champion Chelsea ($460 million), nor
Arsenal ($477 million), but the decidedly provincial minnows of Leicester City, which brought in a
comparatively paltry $150 million last year.
To get an idea of how unlikely its rise is, consider: The Leicester team that beat Chelsea 21

14

FORTUNE.COM

April 1, 2016

SOURCES: BARCLAYS PREMIER LEAGUE; TOTALSPORTEK.COM

in December cost $33 million in player transfer fees

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

of seven wins in the last

nine games.
But the streak isnt just
due to talent. Englands
richest legacy teams have
stumbled lately, often
spending too much on the
wrong players. And the
gap between rich clubs and
poor has been narrowing
for some time, particularly
as the leagues fan base has
gone global, leading to an
inux of spending from
abroad. Leicesters run owes
much to a 2010 takeover by
Vichai Srivaddhanaprabha,
a Thai billionaire with an
empire of tax-free shops at
airports in Thailand.
Still, in a world where
sports have become
dominated by money and
sterile quantitative analysis,
Leicesters unlikely success has made the club the
feel-good story of the year.
Its also made the Premier
League more unpredictable
and more enjoyablewhich,
paradoxically, may make it
more marketable too.

EXCHANGE RATES FOR BRITISH POUND STERLING

TO U.S. DOLLAR AS OF MARCH 17, 2016.

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

MACRO
.CO M V. .GOV

THE WAR OVER YOUR

DATA IS HEATING UP
APPLE v. FBI
The colossus of Cupertinos refusal to
unlock an iPhone is still ummoxing
the FBI. The company fears that making an exceptiona tool to demolish
device defensescould indelibly
wreck users privacy.

FACEBOOK v. BRAZIL
Authorities briey jailed the social
networks Latin America chief in
March after failing to access a drug
crime suspects WhatsApp messages.
Facebook maintains it neither sees nor
stores such information.

ABOVE: WITANHURST,
LONDONS LARGEST PRIVATE
HOME, OWNED BY A RUSSIAN
FERTILIZER MAGNATE
KEEPING UP WITH THE KREMLIN

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

MICROSOFT v. U.S.

properties in London that

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

No, not the late 90s monopoly case,

but a newer suit. The Redmond giant
has rejected Justice Department demands to turn over customer emails
stashed on Irish computer servers.
ROBERT HACKETT

B U B B L E WAT C H

179,778
THE NUMBER OF FAMILY
HOMES AND CONDOS FLIPPED
LAST YEAR, THE HIGHEST IN
10 YEARS. ALARM BELLS,
ANYONE?
SOURCE: REALTYTRAC

EVER SINCE the price

of oil started slipping
in 2014, economists
have worried about

16

FORTUNE.COM

April 1, 2016

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

companieswith a
combined debt of over
$150 billionare at
high risk of default or
bankruptcy. Thelarger
nancial impact, and
thousands of attendant job losses, could
make cheap gas a lot
less thrilling.

U.S. OIL AND GAS E&P*

BANKRUPTCIES

ANNE VANDERMEY

* EXPLORATION AND PRODUCTION

OIL AND GAS EXTRACTION

EMPLOYMENT

194,900

AT RISK: 175
29
6
2013

179,800

7
2016

FEB. 2013

FEB. 2016

SOURCES: DELOITTE; BLS

w ita nhurst: sov fotouig v i a gett y im ages

Bankruptcies Loom in
the Fracking Industry

QGODUJHVW
auto insurer

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satisfaction

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since 1936
The other guy.

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Employees Insurance Company, Washington, D.C. 20076; a Berkshire Hathaway Inc. subsidiary. 2016 GEICO

MACRO

CHASING UTOPIA

We Were Promised a 20-Hour

Workweek
INSIDE THE DEBATE OVER THE PRODUCTIVITY SLUMP.

By Erika Fry

ERES A STUMPER: We live,

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

18

FORTUNE.COM

April 1, 2016

U.S. GDP would be $3 trillion higher, up 17%, had we

maintained the 2.8% productivity growth rate of the
late 90s and early aughts.
Silicon Valley, for its part,
argues theres a measurement problem, not a slowdown, and says big contributions from new technology
are missing from the data.
Both new papers disagree,
thoughone even found that
with better measurement,
growth would be slower.
Why, at this time of great
technological progress,
is efficiency plateauing?
Economists have only theories: A feel-good one is that
weve seen less a slowdown
than a return to normal.
The soaring productivity experienced at the turn of the
millennium had much to do
with the wide adoption of
revolutionary information
technology. A more dour
one, proffered by Northwesterns Robert Gordon, is
that Americas most produc-

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

BOOK VALUE

HOW TO TALK LIKE TED

(THIS TIME FROM TED ITSELF)

THE POWERFUL TED Talk

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

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

Dont sell
anything;
good
talks are
about
ideas.

Make eye
contact
with
people
in the
audience.

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

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

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

FIDELITY FIXED INCOME

STABILITY AND EXPERIENCE
IN EVER-CHANGING MARKETS
Stability, experience, and consistency are important criteria when choosing xed income investments.
Fidelity is one of the most experienced xed income investors in the industry, managing more than $860 billion
in xed income assets,* with 200+ xed income research professionals. We employ a team-based approach
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26

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Fidelity xed income

funds are rated 4 or 5 stars
by Morningstar.1

Fidelity xed income funds

have a GOLD Morningstar
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xed income funds

in Kiplingers 25 Favorite
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are Fidelity funds.3

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Consider these Fidelity funds whose portfolio managers average more than 23 years of experience between them.
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FIDELITY TOTAL BOND FUND FTBFX

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FIDELITY INTERMEDIATE MUNICIPAL
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FIDELITY TOTAL BOND ETF FBND

Ask your advisor about
FIDELITY ADVISOR TOTAL BOND FUNDCLASS I FEPIX

Ask your advisor about

FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUNDCLASS I FZIIX

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

Before investing in any mutual fund or exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus,
offering circular, or, if available, a summary prospectus containing this information. Read it carefully.
Past performance is no guarantee of future results.
ETFs are subject to market uctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market
price, which may be higher or lower than their NAV, and are not individually redeemed from the fund.
In general, the bond market is volatile, and xed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term
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political, regulatory, market, and economic risks. Any xed income security sold or redeemed prior to maturity may be subject to loss.
* Data accurate as of 06/30/2015.

As of 12/31/2015, Fidelity Total Bond Fund earned 4 stars based on its risk-adjusted performance, compared to 947 share classes within its Morningstar Intermediate Term Bond category; Fidelity Intermediate
Municipal Income Fund earned 3 stars based on its risk-adjusted performance, compared to 298 share classes within the Morningstar Muni National Interm category.
1
For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a funds monthly performance
(including the effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of the funds in an investment category
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Fidelity Brokerage Services LLC, Member NYSE, SIPC. 2016 FMR LLC. All rights reserved. 701416.7.0

MACRO

EXECUTIVE READ

Steve Case Wants

Tech to Love
the Government
IN HIS NEW BOOK, THE AOL CO-FOUNDER SAYS
TECHNOLOGY IS FINALLY COMING TO HIGHLY REGULATED
INDUSTRIESAND ITS GOING TO CHANGE EVERYTHING.

played as pivotal a role as Steve Case. The head of the upstart

company America Online in the 1990s, Case helped popularize the Internet for the average American household. He
packaged free-trial CDs with steaks and made Youve got
mail an iconic tagline. He also, it has to be noted, brokered
one of the most disastrous corporate mergers in history, between AOL and media giant Time Warner. In his new book,
The Third Wave, Case outlines what todays emerging tech
companies can learn from the riseand fallof the old ones.
Here, highlights from Cases conversation
with Fortune. Anne VanderMey

Further
re ading

20

FORTUNE.COM

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

GRIT: THE POWER

OF PASSION AND
PERSEVERANCE

ALIBABA:
THE HOUSE THAT
JACK MA BUILT

SHOE DOG:
A MEMOIR BY THE
CREATOR OF NIKE

By Angela Duckworth

By Duncan Clark

By Phil Knight

DUE OUT: May 3

DUE OUT: April 12

DUE OUT: April 26

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

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

Nikes legendary
co-founder looks
back on building an
American icon.

Policy will also become

a bigger deal because these
are regulated businesses.
In many cases, actually, the
government is the largest
customer, so a strategy of
ignoring government
which is pretty common
nowwont work.
How does this relate
to AOL?
Those dynamics about
partnerships and policy
and also perseverance were
what really made the rst
wave possible. Without
partnerships, the Internet
never could have happened.
Without the government,
the Internet never could
have happened.
What do you think is going
to happen to the companies that are huge today?
Will they stick around?
Some will, some wont.
Obviously I lived that with
AOL, which was dominant
at the rst wave and lost
ground in the second wave.
Then theres Amazon, which
started kind of at the end of
the rst wave but reinvented
itself. Some strong secondwave companies will do that.
The sectors you say are
ripe for disruptionfood,
hospitals, transportation, education, nancial servicesare pretty
fundamental. Youre
talking about a huge shift
in the way we live in the
near future.
One thing thats been striking is the pace of innovation, the pace of disruption, over the last 10 or 20
yearsthe things you can
do now that you couldnt
dream about even 10 years
ago. At the same time, when
youre looking at some of the
industries that are the most
important in terms of our
lives, they havent changed
in centuries. There, were at
the beginning.

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

IN THE ANNALS of American cultural history, few CEOs have

In this book you lay out

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

Netix
CEO
Reed
Hastings

MACRO

WORLDS
MOST
ADMIRED
COMPA NIES

Whats Next
for Netix?
THE STREAMING SERVICE IS ON A GROWTH STREAK,
BUT THE STOCK HAS BEEN VOLATILE. HERES WHY.

By Lauren Silva Laughlin

reappeared
on Fortunes
Worlds Most
Admired
Top 50 All-Stars list last
month after a four-year absence. Responders to our survey, who are business insiders
and C-suite executives, arent
the only ones who have fallen
in love, then out, then back in
love. The company is in favor
again because of a focus on
innovation and stellar stock
performance. An investor
who purchased 100 shares
10 years ago would have seen
his or her stake balloon from
$2,200 to $73,000, with
dividends reinvested.
Even over the past year

22

FORTUNE.COM

$120

$97.8

100

80

60

NETFLIX STOCK

SOURCE: S&P GLOBAL

MARCH 2015

MARCH 2016

the stock has given investors

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

ed, in Japan, for example, only

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

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

ETFLIX

Crockett. Investors struggle

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

For the most critical questions.

No matter how complex your business questions, we have the
capabilities and experience to deliver the answers you need to
move forward. As the worlds largest consulting rm, we can
help you take decisive action and achieve sustainable results.
www.deloitte.com/answers
Audit | Tax | Consulting | Advisory
Copyright 2016 Deloitte Development LLC. All rights reserved.

Consulting





 




Get back to bliss.

Keep business moving forward, even on vacation.
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Progressive Casualty Ins. Co. & afliates. Business insurance may be placed through Progressive Specialty Insurance Agency, Inc. with select insurers, which are not afliated with Progressive,
are solely responsible for servicing and claims, and pay the agency commission for policies sold. Prices, coverages, privacy policies and commission rates vary among these insurers.

APRIL 1, 2016

Venture
BOUNCING B A CK

THE
UNEXPECTED
PAYOFF OF
FAILURE
Sure, aming out
in your own startup
provides wisdom
and experience. Now
theres proof of a
surprisingand more
concretebenet.
By Jennifer Alsever
IN RECENT YEARS the notion
that failure brings rewards
has become so venerated
by business thinkers (and
publications) that you could
be forgiven for thinking
yourself lacking if you
havent suffered at least one
calamitous, abject disaster
in your career. In truth,
people who have tried and
failed at launching their
own startup know that it
incurs many unrecouped
costs: time, sweat, emotion,
and, most often, money.
But new research reveals
an unexpected reward for

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

FORTUNE.COM

27

VENTURE

THE UNEXPECTED PAYOFF OF FAILURE

those who abandon the entrepreneurial life. According

to a paper by nance professor Gustavo Manso of the
University of California at
Berkeley, self-employment
does, in fact, pay offoften in the form of higher
wages when the person
returns to work at another
company. You dont need
to be crazy to be entrepreneurial, says Manso, who
holds the schools William
A. and Betty H. Hasler
Chair in New Enterprise
Development. Theres a
reasonable payoff.
Manso analyzed the earnings of more than 5,000
Americans between 1979
and 2012, using data from
the U.S. Bureau of Labor
Statistics. They showed that
the typical person makes less
as an entrepreneur than he
could earn at a bigger company. Most of those people
go back to salaried jobs after
two years or lessand thats
where it gets interesting.
People who had been selfemployed at one point in
their career did better nancially compared with people
who hadnt, according to
Mansos research. Those who
tried and abandoned entrepreneurship after less than
two years werent punished
nancially when they moved
to another employer. And
those who lasted more than
two years as entrepreneurs
ended up earning 10% to
20% more than their peers.
Big companies are willing

to pay more because they

believe theyll get more bang
for their buck, says John
Reed, senior executive director at IT staffing rm Robert
Half Technology. In just the
past few years he has seen
increased demand for entrepreneurial recruits, especially
among large companies.
Former business owners
often bring a broad set of
skills gained from handling
multiple problems, moving
fast, and getting things
done with limited resources.
Says Reed: Big companies
need that different way of
thinking.
That was the case for
David Bloom, whose
e-commerce software
startup, Ordrx.com, shut
down last year despite
$2.5 million in investment
from Google and Techstars,
industry accolades, and 40
employees. Failure couldnt
have worked out better for
him. It turns out all the
sleepless nights about meeting payroll and the long
hours building software and
doing customer research set
him up for a big promotion.
Before he started Ordrx, he
had been a product director
at American Express. When
he returned to the workforce
late last year, he nabbed a
vice president job at Dow
Jones, earning nearly double
his previous salary. What
I got out of leaving was
much more diverse professional skills than if I had
stayed at American Express,

For more coverage of entrepreneurs and practical advice on how to

found and nurture a young company, turn to Fortune.coms expanded
new Venture section: fortune.com/venture

28

FORTUNE.COM

April 1, 2016

THREE BENEFITS OF
FALLING DOWN

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

IT COULD
MAKE YOU
HAPPIER
Research by the
University of
Pennsylvanias
Wharton School
of Business found
that the average
entrepreneur
whether
successful or
notreported
higher career
and work-life
satisfaction than
salaried peers.

Bloom says. A startup was a

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

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

startup that sold designer

ngernail decals, before
deciding she wasnt passionate enough to continue long
term. She discovered she
hated the back-office tasks
of budgets and taxes, but she
excelled at getting press for
her startup in a number of
national beauty magazines.
When she went back to
the workforce, she applied for high-level public
relations jobs, despite no
formal training or past
PR positions. (Most of her
10-year career was spent in
marketing.) Yet Kim landed
a senior-level job heading
all the communications for
Gusto, a 300-person online
payroll company. Plus, she
says, she received a 20% pay
raise from her last salaried
job. Its my dream job, she
says, but I never would
have gotten it if I hadnt
been an entrepreneur.

Im glad I missed my delivery.

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

Copyright 2016 United Parcel Service of America, Inc.

Revitalizing downtown takes the same ingenuity

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

CGCB-A10130-00-7600

Siemens, 2016. All Rights Reserved.

usa.siemens.com/ingenuityforlife

VENTURE

Sharp at his
winter home in
Palm Springs

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

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

SADORE SHARP

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

HOW I GOT STARTED

commitment to service has

become the hallmark of the
Four Seasons chain. Sharp,
84, remains chairman of the
company, which manages
96 hotels and resorts (they
collectively generate $4 billion in annual revenue) in
41 countries. To this day, he
says, if developers want to
launch a new Four Seasons,
we control what will be built
and hire the people who will
work there. We dont franchise
the name. Sharps story:
I never thought about
going into business. My parents were immigrants who
had moved from Poland to
Israel in the 1920s, then to
Canada, where I was born
in 1931. Downtown Toronto
back then was a Jewish
ghetto, and my father built
houses. My mother would
take in boarders, and if
someone liked the house,
shed sell it. So we moved 15
times by the time I was 16.
During the summers,
Id work construction with
my father and enjoyed it.
I went to Ryerson Institute
in Toronto and studied
architecture because I
thought construction was
going to be my career. After
graduating, I went to work
with my father.
Many parts of our lives
are circumscribed by chance
events and coincidences.
In 1955 a friend decided
to build a small motel and
hired me to do it. I thought,
If a motel on a limited-access
highway was successful, why
wouldnt it work downtown?
So I decided to build a motel

FORTUNE.COM

31

VENTURE

HOW I GOT STARTED

in the inner part of the city.

It took me ve years to convince anyone to invest in it.
Fortunately, my brotherin-law, his friend, and my
dad each put up $90,000. I
borrowed $125,000 from the
Bank of Nova Scotia and got
the rest from Cecil Forsyth,
head of Great-West Life Insurance. We leased furnishings and got the sub-trades to
wait for part of their money
until the hotel opened. The
hotel cost a couple million
dollars to buildso talk
about leveraging a deal.
We charged $10 to $12 a
night, a far cry from what
we charge today. I didnt
know anything about the
hotel business, so I hired a
general manager. To me, it
was just a real estate deal,
a motel that Id open and
probably sell. But I knew
what I wanted it to be, in
terms of the nature and

style of the place. I thought

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

CREATING A GOLDEN RULE CULTURE

Sharps philosophy has made Four Seasons a perennial on
Fortunes list of the 100 Best Companies to Work For.

To motivate
employees
togive

customers personalized service,

we should treat our employees the way we
expect them to treat our customers.

When we
upgrade
a hotel

we rst upgrade employee facilities.

Nonsupervisory workers meet with hotel
general managers regularly. Workers give
suggestions for streamlining systems.

When we
have to
downsize

in recessionary periods, people see how we

manage the process. We keep in touch with those
we let go, and when things get better, we bring
them back.

Peoples
expectations

are dierent in every country, but the culture of

operating under the Golden Rule ts everywhere
because it ts in the scriptures of every religion.

32

FORTUNE.COM

April 1, 2016

hotel. In London we stayed

at the Dorchester, and I was
blown away by it. When we
returned to Toronto, I happened to talk to a builder
who worked for the Robert
McAlpine Company, which
owned the Dorchester.
That connection led to a
deal to build a London hotel
that we would run. The Inn
on the Park London opened
in 1970 and was voted the
best hotel in Europe after
its rst year of operation.
I knew it was because wed
established a new level of
service that differentiated us
from the competition.
Things didnt always
go as planned. In 1974 we
committed to building a
$25 million hotel in Vancouver that we would lease
after it opened. Unfortunately, unexpected ination
kicked in, and we couldnt
make the numbers work.
The owners of the land were
three corporations. I told
them I couldnt pay for the
cost to nish the project or
the rent Id owe them.
The owners rewrote our
agreement so we could all
survive, and I borrowed
more money to complete
the hotel. That near-ruinous
experience taught me that
the nancial risk of building
and owning hotels was too
great. Thats when I decided
to move from construction
to the hotel business. So
now we are a management
company with a small interest in owning the hotels.
Throughout everything,
I had a wife who never
complained, and she picked
up the load of being there for
our four children. In 1978
our teenage son Chris died
of melanoma. The loss of
a child to sickness changes
you forever. After Chriss
death, Terry Foxs run across
Canada to raise money for
cancer, despite a leg being
amputated due to cancer,
truly inspired us. One of the

more meaningful legacies of

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



 
  


 

    
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/LEHUW\0XWXDO,QVXUDQFH,QVXUDQFHXQGHUZULWWHQE\/LEHUW\0XWXDO,QVXUDQFH&R%RVWRQ0$RULWVDIOLDWHVRUVXEVLGLDULHV

APRIL 1, 2016

Pursuits
SM A R T T R AV EL

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

BRING FIDO

HOPPER

Travel
Tech
By Christopher
Tkaczyk

34

FORTUNE.COM

April 1, 2016

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

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

BRAVOLOL
PHRASEBOOK
This app is a musthave for travelers
who dont speak the
local tongue. It has
hundreds of key basics in 13 languages,
including traditional and simplied
Chinese. Listen to
audio pronunciations
and then record and
play back your own
voice to hear how you
sound. Extra categories can be accessed
by upgrading to the
pro version for $4.99
per language. It even
includes important
phrases for romance,
suchasCanIbuyyou
a drink? and Leave
me alone.Free.

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

a ll a pplication icons courtesy of the compa nies

The best apps

for summer
travel planning.

FARECASTING is a game as much

as a science. To win that game
and maximize your summer
vacation budget, start looking for
airfares now. My preferred go-to
is Google Flights, followed by
Kayak and Hopper. Theres also
a new service called DealRay that
sends text messages to your phone
with breaking fare news, so you
wont miss those $29 offers from
JetBlue and ights to Asia for less
than $400, including taxes. At $10
a month DealRay is pricey, but it
could eventually pay for itself if
you nd a rock-bottom fare deal.
Here are a few other tools that can
help with nding great airfares
and guring out what to do once
you get where youre going.

One of the best apps

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

and mapped routes

for a morning run, and
themed itineraries
feature Woody Allens
New York City and a gin
lovers tour of London.
The downside? Its
available for only
12 cities in the U.S.
and Europeand
unfortunately the
avatar for Clarice
looks nothing like
Jodie Foster.Free.

This app is a great

resource for travelers
seeking pet-friendly
hotels, a local vet,
outdoor restaurants,
or parks and beaches
that allow animals
as well as the nearest
pet store. It will even
help you determine
whether a hotel permits larger dogs and
if there are additional
fees tied to a pet
stay. The only thing it
wont do is take Fido
for a walk though
it can help you nd a
local pet sitter or dog
walker.Free.

PURSUITS / Black Book

of cocktails in So Paulo (try the

Brasil Apple Smash).
Coee break: When Im
shopping at Galerie Melissa on
Oscar Freire Street, I always
stop to visit Santo Gro Caf.
Its the best coee shop in the
area, and their beans make an
excellent souvenir. Look for the
house mix Blend Santo Gro.

See so paulo in a Day

Heading to Rio for the Summer Olympics? Dont
miss Brazils biggest (and best) city. By Adam Erace
AN EIGHT-YEAR VETERAN of Brazils hospitality industry, Samuel

Campos calls the electric city of So Paulo the most vibrant

in the country. As a concierge at the modern, ark-shaped Hotel
Unique, he knows all the spots for his guests passing through
the busy (and unexpectedly beautiful) business hub.

the Parque do Ibirapuera. It

has a magnicent collection
of photographs, paintings, and
clothing from ve centuries of
African immigration.

Toughest dinner reservation: If were contacted far in

advance we usually can get you
a reservation at D.O.M., the only
two-Michelin-star restaurant
in Brazil and ninth on San
Pellegrinos 50-best list. Chef
Alex Atalas tasting menu is a
masterpiece featuring Brazilian
ingredients.
O

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

Day

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

FORTUNE.COM

O Things to avoid:Monday is the

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

The

$10,000

36

Watering hole: SubAstor

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

Locals secret: Even some

paulistanos dont know the
Sesc Pompeia, a cultural center
in the west zone of So Paulo
designed by architect Lina Bo
Bardi. There are community
classrooms,apopularrestaurant
andbar,atheater,areadingroom,
andaverticalsportscomplex.
O

April 1, 2016

WE ASKED SAMUEL CAMPOS TO PLAN A SINGLE, SPECTACULAR DAY IN SOPAOLO

Our private car will take you to a helicopter landing, where youll take an outstanding one-hour
sightseeing ight. Flying over So Paulo will give you views of the most iconic buildings in this huge
city, including the stunning Edifcio Copan, designed by Oscar Niemeyers rm. After the ight, enjoy
lunch at Man with some of the best dishes in town, followed by shopping on Oscar Freire Street. Youll
meet Flavia Liz, who runs the most exclusive personal guide team in the city. Her customized tours
focus on subjects like street art, design, and architecture, and even go inside the favela slums. Have
an unforgettable dinner at Kinoshita, a Japanese restaurant headed by the very friendly chef Tsuyoshi
Murakami. To end the night, get a drink at the breathtaking Skye Restaurant & Bar on our rooftop.
For a longer, interactive version of this story, go to fortune.com/blackbook.

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

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

Best new restaurant:

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

O Urban escape: Easily

accessible by car, Praia de
Pernambuco is a calm beach
with a magnicent landscape
in Guaruj, a coastline city
situated about 60 miles away
fromSoPaulo.Itsagreatoption
for a day trip from the great
urban center on a sunny day.

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

MORNING COMMUTES
ARE EASIER
AFTER A WEEKEND
OF LONG DRIVES
MAKE MONDAY BETTER

BOOK A WESTIN WEEKEND

Official Hotel of The PGA of America.

Enjoy more time on the green with
3pm late checkout* on Sunday.

SOMETHINGS
COMING
At Mitsubishi Heavy Industries,
theres always something new
on the horizon.

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500-4#)3+%6-563#-.#%*+/'39#/&05*'3'26+1.'/58'4611035+/&6453+#-
&'7'-01.'/5#/&.#/6(#%563+/)130&6%5+7+590/#)-0$#-4%#-'

APRIL 1, 2016

drone: nick y lohbloomberg v i a gett y im ages

PERSON OF IN T ERES T

Atif Rafiq Chief Digital Ocer, McDonalds

AGE: 42 HES LOVIN IT: Rafiq left Amazon two years ago
to become the fast-food chains rst chief digital ocer.
His mission? Transform its business with technology. We
know where we have strength and what people know us for.
Were not trying to get into something thats foreign to us.
SPECIAL SAUCE: The former Kindle Direct Publishing chief
built a digital unit from scratch, recruiting hundreds of
techies from Google, Amazon, and others. He also sparked
partnerships with Silicon Valley players like Postmates,

TICKER TAPE
A collection of curiosities

which will deliver McNuggets straight to your McHome.

NEW WAYS TO LOVE: Recent initiatives include handsfree payments and automated kiosks where customers
can order their food. Were constantly looking at major
trends. SUPERSIZED: Raqs rapidly expanding team
now includes oces in Chicago, San Francisco, and other
major cities. HE BELIEVES IN MAGIC: In March, Raq created a virtual-reality experience that let people step into
a Happy Meal. VR is relevant to us. Michal Lev-Ram

2.8 MILLION DRONES

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

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

41

TECH

IN CONVERSATION

the roof. People spend three

times more time watching
videos when they are actually
live. But a much better measure of success was every individual on my team saying that
they had amazing experiences
using it or watching live videos
of musicians, politicians, or
celebrities. We havent been
this excited about something
in a long time.
How are people using Live?
Chef Mario Batali is using it
to ask viewers to submit their
four favorite ingredients in
comments, and he creates
custom recipes for them
on the y. Sara Seager, an
astrophysicist and planetary
scientist, is going live from
Discoverys page to answer
questions about the solar
system.

Q+A

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

When Fidji Simos 6-month-old daughter tried solid

foods for the rst time, the infants grandparents were
able to watch the expression on her face. The moment
didnt take place in person, thoughSimo, 30, instead
broadcast it using her iPhone and Facebook Live, the
social networks new video-streaming service. Video is
key to the companys bid to maintain its rapid growth:
Already 500 million people watch 100 million hours
on Facebook every day. Can it catch up to Googles
YouTube and Twitters Periscope? We spoke to Simo.

57%
42

FORTUNE.COM

April 1, 2016

Where did the idea for

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

FINANCE EXECS WHO DONT HAVE A PLAN TO RESPOND TO THE RISE OF BLOCK-CHAIN TECHNOLOGY
source: pr icewater housecoopers

Whats behind its growth?

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

EXPERTS

COLLABORATING
ON CARE IS WHAT WE CALL
A HEALTH CARE

COMMUNITY

HEALTHIER IS HERE
Modernizing health care is all about bringing the right people
together to solve problems. As a health services and
innovation company, we power modern health care by
combining data and analytics with technology and expertise.
That means stronger strategic partnerships and greater
access to resources that enable the health system to work
as one. Because when you start with better collaboration,
what happens next is better care.
optum.com/healthier

TECH

A BOOM WITH A VIEW

the line between

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

ANY INVESTORS would rather buy Puerto

MORE BWAV

Follow Erin Grifth on

Twitter (@eringrifth)
or at fortune.com/boom.

44

FORTUNE.COM

April 1, 2016

illustr ation by a lex eben mey er

Rican bonds than try to take on a tech

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

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

able to conduct a Google

search on an Apple iPhone,
for example, or watch a
YouTube video within
Facebook.
That means techs big guns
must play nice with one another, even as they compete
in increasing ways. Call them
frenemies. The dynamic
helps explain why Amazon is
trying to crush Netix with
its streaming-video service
as it sells the company cloud
storage for that service.
It also explains why I cant
watch Transparent, a show
produced for Amazon Prime
Video, using my Apple TV
and why I cant buy an Apple
TV on Amazon.com.
The turf wars between social media companies have
been especially malicious.
In 2012, Facebook-owned Instagram stopped allowing its
photos to show up inside the
Twitter app. Twitter pulled a
similar move the year prior,
excluding its content from
Googles search results after
the two companies failed
to strike a deal. (Access has
since been restored.) Today,
Facebook doesnt explicitly
attribute the news items it
curates from Twitter, preferring instead to use the vague
social media as the source.
The reasons behind these
moves are often as petty
as you might expect. One
executive offended another.
One company believed
a frenemy had copied its
work. One frenemy actually
did copy anothers work.
And, yes, whining about
things like share buttons and
platform integrations seems
just as trivial. But there are
few alternatives to the services offered by the big four.
Techs giants have trained us
to expect whatever we want,
whenever (and wherever)
we want it. But in a winnertake-all world full of tech
frenemies, the consumer
often winds up with little
choice at all.

















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TECH

BUSINESS IN THE CLOUD

The View from Above

Machine learning is turning commercial
satellite imagery into an omnipresent
source of business intelligence.

satellite im ages: courtesy of digita lglobe; woz ni a k: bur a k a k bulu t

a na dolu agenc y/gett y im ages

By Clay Dillow

ACEBOOK HAS A vested interest in

helping the 4.2 billion people who

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

So the Facebook Connectivity Lab team set out to

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

nations where even basic

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

DigitalGlobe satellite imagery, clockwise from top left: Antananarivo,

Madagascar; West Odessa, Texas; Kimberley Coast, Australia; Nairobi;
Table Rock, Wyo.; Longyearbyen, Norway

THIS ISNT THE COMPANY THAT

APPLE WAS. Co-founder Steve Wozniak on the Apple Watch

r eddit

April 1, 2016

FORTUNE.COM

47

TECH

BUSINESS IN THE CLOUD

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

29%
50

FORTUNE.COM

satellite images into meaningful insights, Facebook

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

IT workers afraid that artificial

intelligence will replace their jobs
eva ns data cor p.

April 1, 2016

analytics rms working with

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

38%

Descartes Labs, of Los

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

Manufacturing execs who believe their supply

chain will not be affected by tech this year
gt nexus/yougov

courtesy of digita lglobe (2)

imagery of the same parts

of the planetat least once
every 24 hours. Humans
will soon be able to see
huge swaths of the planet
change daily.
With the effort, Facebook
joins a growing cast of
Silicon Valley companies
scrambling to perfect
machine learninga newly popular form of articial
intelligencethat could
unlock value in petabytes
of satellite imagery.
Theres a lot of location
data out there, but there
hasnt been a good way to
use it to answer questions,
says Kevin Lausten, director
of geospatial big data at
DigitalGlobe. If you can
start to correlate all this information, you can uncover
business opportunities.
Discovering correlations
within reams of visual data
requires technology that can
both see and comprehend.
To turn DigitalGlobes raw

 

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APRIL 1, 2016

Invest
RES TAUR A N T S T OCKS

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

ac-bn photosgett y im ages

N THEORY, demand is evergreen in the restaurant business: We all have to eat. But during
the past year many restaurant stocks have
taken the kind of plunge that makes fainthearted investors lose their lunch.
Worries about Chinas slowdown have buffeted Yum Brandsparent of KFC and Pizza Hutwhich
plans to split off its China business to localize the contagion. Chipotle Mexican Grill has grappled with bad publicity from multiple E. coli and norovirus outbreaks, which
have helped lop 33% off its stock price. And Shake Shacks
shares have fallen back to earth, plummeting below $35
from over $90, as investors realized that the small burger
chains growth couldnt justify its Mars-orbit valuations.

April 1, 2016

FORTUNE.COM

53

INVEST

RESTAURANT STOCKS

Throw in an uncertain
economic outlook and
industrywide pressures to
increase the pay of fastfood workers, and restaurants have looked like an
increasingly unappetizing
stew to investorsmaking
their stocks among the
biggest losers in this years
market dip. Nicole Miller,
managing director and
senior restaurant analyst
at Piper Jaffray, says that
even after a recent rally, the
25 names she covers trade
at an average of 10 times
Ebitda (earnings before
interest, taxes, depreciation,
and amortization). Over
the past few years they had
oated between 12 and 15
times Ebitda.
To some investors, those
falling valuations signal
an overreactionone that,
Miller says, has made many
stocks fairly attractive
and very investable. The
bulls believe that American consumers will remain
healthy and hungry enough
to keep restaurant revenues
growingespecially since
unemployment is below 5%
and cheap gas is leaving
more cash in their pockets.
While cheaper fuel hasnt
translated to more spending
in many consumer sectors,
restaurants have been an exception. Total sales for 2015
edged upward by 3%, to
more than $700 billion, and
market research rm NPD
Group forecasts that Americans will make 61.8 billion
visits to restaurants and
food-service outlets in
2016which would be the
highest gure since before

54

FORTUNE.COM

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

63.5
63

YEARLY U.S.
RESTAURANT AND
FOOD-SERVICE
VISITS

62

61.6

61.8

61

61.0
ESTIMATED

60
2006

2012

2016

2022

SOURCE: NPD GROUP

the Great Recession.

Admittedly, those gures
dont represent explosive
growth. Its still a challenging environment, with
erce battles for market
share, says Bonnie Riggs,
NPDs restaurant industry
analyst. But there are some
real winners in the industry. Among the dominant
trends, says Riggs: anything hot and spicy (think
sriracha, ghost peppers, and
jalapeos); morning meals,
such as McDonalds all-day
breakfasts; and healthier
menus that break the pizzaand-cola mold.
Given the tough competitive landscape, analysts and
investors are being selective.
Brian Vaccaro, senior res-

April 1, 2016

taurant analyst at Raymond

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

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

WHERE LEADERS OF
SCALE-UPS...MEET-UP
TO SUCCEED, MAYBE EVEN TO SURVIVE, IN THE NEW ENVIRONMENT, ORGANIZATIONS
AND LEADERS MUST FUNDAMENTALLY CHANGE. General (Ret.) Stanley McChrystal
GENERAL (RET.)
STANLEY McCHRYSTAL

Commander of the Joint Special

Operations Task Force in Iraq;
Author of Team of Teams: New Rules
of Engagement for a Complex World
OTHER FEATURED SPEAKERS INCLUDE:

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VP Innovation and Entrepreneurship

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Author of What Great Brands Do:

The Seven Brand-Building Principles
that Separate the Best from the Rest

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Community of Businesses; Author
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Author of What Happens in Vegas

Stays on YouTube: Privacy is Dead.
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Author of The Networked Organization:

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Like Never Before

AUBREY DANIELS

Author of Bringing Out the Best

in People: How to Apply the Astonishing
Power of Positive Reinforcement

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May 24-25 | Atlanta, Georgia
A key source of business contacts, deal ow, and
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out-learn and out-think the competition in the elds
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Join ScaleUp Summit attendees from companies including:
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INVEST

HIGH-YIELD DEBT

How toxic are

your junk bonds?

T
58

FORTUNE.COM

April 1, 2016

After a nerveracking downturn

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

many mom-and-pop investors have decided the income

is worth a few sleepless
nights. But bond defaults
tend to rise, and prices to fall,
when the economy weakens.
That dynamic played out
over the past year, as investor

illustr ation by m a r k a llen miller

HE AVERAGE high-yield bond

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

jitters caused Bloombergs

junk bond index to fall 11.8%
from May 2015 to February
2016. While junk bonds have
partially rebounded, todays
high yields reect enduring
fears about whats to come.
Still, some pros argue that
high-yield bonds are a good
buy at todays prices, even
if a downturn looms. The
key, says Michael Fredericks, portfolio manager of
the BlackRock Multi-Asset
Income Fund, is to focus on
that investment oxymoron,
high-quality junk. During
the recent high-yield slide,
bonds rated CCC or lower,
the bottom of the creditrating barrel, lost 22% of
their value, according to
Morningstar; BB-rated junk
bonds, at the high end of the
spectrum, lost only 6%.
The good news is that
many mutual funds focus on
higher-rated junk. If prices
do have further to fall, funds
like these limit losses. That
can position investors to
capture decent longer-term
gains: The 10-year annualized return of the Bank
of America Merrill Lynch
U.S. High Yield index, for
example, is 6.5%, on par
with the S&P 500and
that includes a very rough
patch during the 200809
nancial crisis. Among funds
focusing on higher-quality
credit, Todd Rosenbluth,
director of ETF and mutual
fund research at S&P Capital
IQ, recommends the iShares
iBoxx High Yield ETF
and the Janus High Yield
Fund, which both hold most
of their portfolios in bonds
rated B or higher.
The pros overall advice: Treat junk bonds like
stockshigher-risk, higherreward investments for the
long term. Andrew Dierdorf
of Fidelity Freedom Funds
recommends holding no
more than 10% of your portfolio in junkand as little as
3% in iffy times like these.

OUTSOURCING MORE

ROBOT JOBS
TO HUMANS.

Amerivest Managed Portfolios offered through TD Ameritrade.

Its the power of investing technology combined with a human touch.
Amerivest will constantly monitor your portfolio to keep it properly diversified,
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Call an Investment Consultant at 800-440-8124

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Amerivest is a registered investment advisor and an afliate of TD Ameritrade. For more information, please see the Amerivest
Disclosure Brochure (ADV Part 2) http://tdameritrade.com/forms/TDA4855.pdf. Advisory services provided by Amerivest
Investment Management, LLC. TD Ameritrade, Inc., member FINRA/SIPC. 2016 TD Ameritrade IP Company, Inc.

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

Tata Steel

Hero MotoCorp

Yogesh & Rajesh Agrawal,

Ajanta Pharma Limited

BEST-IN-CLASS
MANUFACTURING

MANUFACTURING
INNOVATOR OF THE YEAR

YOUNG MAKER OF
THE YEAR AWARD

We would like to congratulate both the winners

and finalists of the 2016 TIME India Awards and look
forward to an intense competition in 2017.

RUNNERS-UP
JUDGING
PANEL

Norman Pearlstine

Kevin Sneader

Chanda Kochhar

Chief Content
Officer, TIME Inc.

Chairman, Asia,
McKinsey & Co.

Managing Director
& CEO, ICICI Bank

John Rice

Carlos Ghosn

Rana Foroohar

Vice Chairman,
General Electric

CEO, Renault &

Nissan

Asst Managing
Editor, TIME

BEST-IN-CLASS
MANUFACTURING

MANUFACTURING
INNOVATOR FOR THE YEAR

YOUNG MAKER
OF THE YEAR AWARD

Shahi Exports Ltd

Hindustan
Unilever Ltd

Mahindra &
Mahindra Ltd
Samsung India
Electronics Pte Ltd

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

N.R. Narayana
Murthy
Co-Founder, Infosys

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

APRIL 1 , 201 6

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

6
7

illustration by
EDEL RODRIGUEZ

LEAD WRITERS

JONATHAN
CHEW
CLAIRE
GRODEN
ADDITIONAL
CONTRIBUTORS
KRISTEN BELLSTROM
SCOTT CENDROWSKI
GEOFF COLVIN
SCOTT DECARLO
ERIKA FRY
LEIGH GALLAGHER
STEPHEN GANDEL
MATT HEIMER
CLIFTON LEAF
MICHAL LEV-RAM
LAURA LORENZETTI
TORY NEWMYER
BRIAN OKEEFE
LEENA RAO
JEFF JOHN ROBERTS

AP RIL 1, 20 1 6

GEOFFREY SMITH
ANNE VANDERMEY
PHIL WAHBA
CLAIRE ZILLMAN
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6
8

70
BEZOS PRIME
As Amazon spreads its hydra-headed

ESPECIALLY STRIKING in our new ranking of the Worlds 50 Greatest Leaders

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

80
THE LIST
Angela Merkel and Stephen Curry. Ruth

94
BONO: I WILL FOLLOW

oerings in new directions, its founder

is also evolving. In a rare interview, Je
Bezos talks about becoming a leader of
leaders and about taking on the mantle of
civic leadership at the Washington Post.

Bader Ginsburg and John Oliver. Paul Ryan

and an Australian marathoner. What do
they have in common? Theyre playing a
leading role in making the world a better
place and inspiring others to do the same.

The gregarious U2 front man could easily

be mistaken for a dilettante celebrityif
it werent for the results he delivers. How
Bonos consensus building has helped
turn One into one of the worlds most
eective forces for poverty alleviation.

BY ADAM LASHINSKY

BY THE STAFF OF FORTUNE

BY ELLEN MCGIRT

WHAT HAPPENS WHEN

CONNECTED
corridor
meets

Michigan is creating the countrys first smart

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

1.888.565.0052
michiganbusiness.org/FM

A P RIL 1, 20 1 6
F O R T U N E . C O M / G R E AT E S T L E A D E R S

1 B

7
0

p ho t o g r a p h b y W E S L E Y M A N N

Je Bezos, photographed
at Amazon headquarters in
Seattle on March 11

no. 1 JEFF BEZOS

BY A DA M L A S H I N S KY

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

7
1

no. 1 JEFF BEZOS

7
2

Reporter Jason Rezaian (left)

and Washington Post owner
Je Bezos aboard a private
aircraft before it took o for
the U.S. on Jan. 22

DOUGLAS JEHLTHE WASHINGTON POST

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

A P RIL 1, 20 1 6

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

you wherever you want. And he said, How

about Key West? I was like, Okay! And
thats what I did. I dropped him off in Key
West. He and Yegi had only been married
for just over a year before he got imprisoned.
It was almost like a second honeymoon.
A jubilant photo of reporter and owner
inside the latters jet quickly made the
rounds. Asked if he meant to make a statement by personally retrieving his employee,
Bezos replies, I did it just for Jason. My
motivation is super simple. But I would be
delighted if people take from it the idea that
well never abandon anybody.
Its an unexpectedly sunny mid-March
morning in Seattle, and Bezoss disposition is even sunnier. Who can blame him?
Amazons market value is $260 billion, with
Bezoss stake worth $46 billion. Bigness
hasnt sapped its growth: Sales jumped
20%, to $107 billion, last year, and Amazon
surprised investors with operating prots
of $2.2 billion, a 12-fold increase from 2014.
The Post, a declining icon before Bezos
bought it for $250 million in 2013, is bubbling with new ideas. Even Blue Origin, the
secretive rocket-ship company Bezos funds
out of his own pocket, is enjoying a moment
of prominence, having promised to blast off
with space tourists in a few years.
To say all this leaves Bezos energized would
be an understatement. Dressed in jeans and
a checkered shirt, sleeves rolled up to the
elbows, the notoriously intense CEO is the
picture of contentment. Hes deploying his
trademark cacklethe auditory equivalent
of Steve Jobs signature black turtleneck
liberally. Says Bezos: I dance into the office
every morning.
Hes got every reason to cha-cha. More
has gone right for Bezos lately than perhaps
at any other time during his two-decade
run in the public eye. His company is expanding internationally and spreading its
hydra-headed product and service offerings
in unexpected new directions. Bezos, too,
is evolving. Always a erce competitor and
stern taskmaster, he has begun to show another side. With the Post, hes taken a seat at
the civic-leadership table. And with his various projects Bezos is also becoming known
as a visionary on topics beyond dreaming

up new ways to gut the prot margins of

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

Post-ing Up: Trac Soars Under Bezos

II.

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

U.S. MULTIPLATFORM MONTHLY UNIQUE VISITORS

70 million

73.4

60
50

NEW YORK TIMES

40

WASHINGTON POST

30
20

WALL STREET JOURNAL

10
0
FEB. 2013

SOURCE: COMSCORE

2014

2015

JAN. 2016

APRIL 1, 201 6
F O R T U N E . C O M / G R E AT E S T L E A D E R S

Editor Marty Baron is discussing how the

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

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

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3

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

AP R IL 1 , 20 1 6

no. 1 JEFF BEZOS

7
4

PATTY STONESIFER,
AMAZON DIRECTOR
FOR 19 YEARS

Today its not a

hub-and-spoke
connecting
to [Bezos]. He
has become a
great leader of
leaders.

ber he proposed. (Graham, who has been

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

Amazon Rockets Higher

The companys revenues have consistently ascended,
though its stock price has faced turbulence and prots
have struggled to lift o.

AMAZON INC. PERFORMANCE

250%

AMAZON STOCK
200

150

213%

100

76%
NASDAQ

50

0
2011

2012

2013

2014

2015

16

$107

$100 billion
80
REVENUES

60
40
20
0
$1 billion

PROFITS
$0.6

0.5
0
0.5
1
1.5
1999

2005

2010

2015

who didnt enjoy an article to pay to remove

its vowels. He called it disemvoweling, and
the concept was to allow another reader to
pay to restore the missing letters. The idea
didnt go far, Prakash says, noting that Marty wasnt very keen. Bezos, an unrepentant
believer in the power of brainstorming, says,
Working together with other smart people
in front of a whiteboard, we can come up
with a lot of very bad ideas.
Post people seem to value most that
Bezos provides them air cover while they

Blue Origins
New Shepard
rocket, which
ew to space
and returned
to the same
launchpad

THE WASHINGTON POST

BLUE ORIGIN

BEZOS EXPEDITIONS

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

Based in an old Boeing plant in

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

The Amazon CEOs investment arm

has staked a variety of startups,
including public companies such
as Workday, Twitter, and Juno
Therapeutics; private unicorns
like Airbnb, Uber, and Nextdoor;
and smaller companies in diverse
elds, such as Vessel (entertainment), Ever (education), and
Glassybaby (collectibles).

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

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

ddle with ways to survive the transition

from print to digital. Hiring has ramped
up signicantly under Bezos, providing
more resources for serious journalism too.
Ryan, the publisher, credits Bezos with
demanding risk takingwithout fear that
failure will be punished. That provides a
sense of invigoration, particularly when
other publications are in this mode of If
this doesnt work, therell be hell to pay
next quarter. So long as Bezos is enjoying
himself, in other words, there is no nextquarter deadline for the Post anymore,
just more opportunities to reinvent journalism, preferably in a way that eventually
makes money.

APRIL 1, 2 01 6

COURTESY OF BLUE ORIGIN

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

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

A P RIL 1, 20 1 6

no. 1 JEFF BEZOS

7
6

BEZOS,
ON THE ROCKET
BUSINESS

Nobody gets
into the space
business
because
theyve done
an exhaustive
analysis and
conclude its
the one with
the least risk
and the highest
return on
capital.

when Blue Origin is ready to y humans.

Bezos quietly started Blue Origin 16
years ago as a research project and has
been mostly mum about it until now. Rob
Meyerson, a soft-spoken Midwesterner and
former NASA aerospace engineer who is its
president, says the stealthy prole largely
has been an effort to avoid hyping unproven technology. Meyerson, who worked
at a private Seattle-area rocket company
called Kistler Aerospace, which went belly
up, joined Blue Origin in 2003 when it had
about 10 employees. At the time, Bezos had
charged his researchers with nding an alternative to the polluting and earsplitting
blastoff methods that space programs have
used since the 1960s. The research failed,
and Bezos changed his mind. Jeff realized
we should invest in liquid propulsion so we
could y a lot, says Meyerson. All of this is
tied to his original vision of having millions
of people living in space.
After years of ts and starts, Blue Origin
is nally ready to go airborne. It has successfully sent an automated spacecraft into
suborbital spaceabout 100 kilometers
above earth, known as the Krmn line, a
10-minute trip from start to nishand
landed it safely on earth. The company
wont say when, but it plans shortly to begin
taking reservations for passengers. It intends to develop a rocket to y into earths
orbit, a feat Elon Musks SpaceX has already achieved, which will allow it to carry
humans and satellites. Eventually, says
Meyerson, we want to sell these things to
customers. We think well start ying passengers in 2017. These will be test engineers. Then well sell tickets. I imagine Jeff
and I will y in the 2018-ish time frame.
As with the Washington Post, Bezos is regularly engaged with Blue Origin, though in a
nonoperational role. Meyerson says Bezos attends a daylong monthly operational review
that often includes presentations by outside
experts. He also visits for weekly fourhour updates on the progress of its orbital
launch vehicle and New Shepard spacecraft.
Meyerson says he initially resisted writing
the famous six-page narratives Bezos requests before meetings, where PowerPoint
is banned. Bezos kept asking, though, and

Meyerson relented. Now, he says, hes a

complete convert.
Bezos wont say how much money he has
sunk into Blue Origin. Reports several years
ago put the gure at $500 million, and the
companys spending velocity has only increased. It has 600 employees on the way to
800, with launch facilities in Texas and soon
at Cape Canaveral, Fla. Nobody gets into
the space business because theyve done an
exhaustive analysis of all the industries they
might invest in and they nd that the one
with the least risk and the highest returns
on capital is the space business, says Bezos.
With his fortune, he can fund rockets for
quite a while to come. Indeed, were Bezos
to keep blowing through $500 million a
year on Blue Origin, he would have to close
the place in 90 years.

IV.
In Seattle, I visit the new Amazon Books
prototype store in a mall near the University
of Washington. Located next to a Banana
Republic and across from a Tommy Bahama
shop, the stores very existence is ironic for
a company considered responsible for the
near extinction of chain bookstores. Once
there was a Barnes & Noble in this mall, before it got Amazon-ed.
As far as concept stores go, Amazon Books
is clever. All but the middle is devoted to
books, stacked 10 or so deep; all face out.
(Other booksellers charge publishers for
face-out placement; Amazon does it on
the assumption that customers prefer it.)
Placards beneath the books contain customer reviews from Amazon.com, curated
by employees. The center of the store is a
showroom for Amazons burgeoning device
businessincluding Echo personal assistants and Kindles of various sizesas well as
a at-screen monitor highlighting Amazons
TV and lm offerings. The stores capabilities
are limited. It doesnt offer store pickup or
returns for Amazon.com purchases, for example. Other ideas demonstrate the promise
of offline/online retail. For instance, if you
use a credit card associated with your Amazon account, youll promptly receive a receipt
by email. All in-store prices match those on
Amazons website.

GEORGE ROSEGETTY IMAGES

At Amazons headquarters an hour later I

tell Bezos where Ive been and that I bought
a book, Coraline, by Neil Gaiman, for my
daughter. He thanks me for my business,
emitting one of his uproarious laughs, and
I tell him I dont think its going to help
much: The paperback cost $3.94 plus tax.
He bursts out laughing again.
Every little bit counts, of course, and
Amazon is adding bits across its vast empire at a furious pace. Its Amazon Web Services business, with $7.8 billion in sales in
2015, has grown so ubiquitous that it now
effectively exacts a tax, as venture capitalist
Chamath Palihapitiya has called it, on every
startup to run its business. Every day seems
to bring another experiment. Amazons efforts to compete against Apples iPhone
failed miserably. But Amazons Echo personal assistant devices running on its Alexa
natural-language engine have won rave reviews for superior performance compared
with Apples Siri. Amazon is cranking up an
ambitious same-day delivery program, becoming a major force in TV and movies, and
has made moves to operate its own air and
shipping transportation eets.
Its all too much for Bezos to micromanage, and he acknowledges picking his spots.
His latest passion is for higher-end fashion, an area Amazon has been upgrading
in recent years; Bezos says he is focused on

Amazons plans for its own private label.

I think theres so much opportunity for
invention there, he says. Its very hard to
do online. Its fragmented offline. People
value a curatorial approach. This, he says,
is a signicant departure for Amazon. We
didnt curate a selection of books. As for
Bezoss other areas of focus at Amazon,
he says hes spending time on certain elements of AWS, but out a few years, as well
as on Alexa and the companys fulllment
centers. As for specics, I cant really
share any because its too much of a roadmap kind of issue.
One reason Bezos can concentrate narrowly at Amazon is the length of tenure of
his top lieutenants. Jeff Wilke, for example, joined Amazon in 1999, and today he
runs Amazons consumer business, which
he calls Amazon Classic. He says Amazons annual planning processand the
detailed narratives its managers prepare
for themallows Bezos to closely audit
the companys efforts. Otherwise, says
Wilke, I would say his style has gone from
being more prescriptive to teaching and
rening. Jeff Blackburn, an 18-year Amazon veteran who runs the companys M&A
activities and content businesses, describes
Bezos as consistent in his selection process.
He still works 65 hours a week. Hes still
connected to the office and doesnt travel

JEFF WILKE,
AMAZON SVP,
CONSUMER
BUSINESS

I would say
[Bezoss] style
has gone from
being more
prescriptive to
teaching and
rening.

APRIL 1, 201 6
F O R T U N E . C O M / G R E AT E S T L E A D E R S

Inside Amazons rst

bookstore, in
a Seattle mall that
used to house a
Barnes & Noble

7
7

AP R I L 1 , 2 0 1 6
F O R T U N E . C O M / G R E AT E S T L E A D E R S

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8

BEZOS, ON HOW HIS

COMPANYS CULTURE
WAS REPRESENTED

The article
doesnt depict
the Amazon I
know, Bezos
said of a New
York Times
investigation
that portrayed
it as a miserable
place to work.

We need to talk.
I think its time
we go our
separate ways.

very much. He dives in on the same issues

now that he did many years ago.
One thing that has changed at Amazon
is the level of scrutiny it endures. Brad
Stones 2013 book, The Everything Store,
lauded Amazons successes while portraying its treatment of partners and suppliers
as shabby. A 2015 expos by the New York
Times portrayed life at Amazon as only marginally more pleasant than in a Soviet gulag. The severe depiction cascaded through
the media, and Bezos told employees that
the article doesnt describe the Amazon I
know. Asked how the criticism has affected
him and Amazon, Bezos deects the question with a politicians ease. A company of
Amazons size needs to be scrutinized, he
says. Its healthy. And its a great honor really to have a company that has grown into
something worthy of such scrutiny.
Amazon had long been known as a grueling place to work, but the Times article
struck a nerve. Amazon red back by criticizing the papers journalism in a post on

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

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

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

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no. 1 JEFF BEZOS

Places farther
than three
feet away.

workday.com

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

was strictly noncommercial. Amazon wasnt

trying directly to sell anyone anything. Says
Bezos, ahead of the event: Ill be satised
if every participant who comes walks away
having made a couple of new friends, having
had some fun, and maybe being inspired by
something amazing.
The billionaires literary interests have
always been eclectic, often unpredictably
so. When I interviewed him in 2012 he had
just nished reading a science-ction book,
The Hydrogen Sonata, by Iain Banks. Now
hes reading Jonathan Franzens new novel,
Purity, which he says, three different people recommended to me. He has also just
completed the rst four chapters of an untitled novel by his wife, MacKenzie, which
he describes in great detail but only on the
condition that I not write about it without
his receiving her permissionwhich she
subsequently withholds. Ive been happily
married for 23 years, and Id like to keep it
that way, he says. There are limits, after all,
even to the powers of Jeff Bezos.

AP R I L 1 , 2 0 1 6

Asked if he has sought out role models for

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

7
9

AUNG SAN SUU KYI

LEADER / NATIONAL
LEAGUE FOR
DEMOCRACY

The List

FEATURING
NOMINATIONS
FROM A PANEL
OF EXPERT
ADVISERS:

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

Angela
Merkel
CHANCELLOR / GERMANY

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

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

8
0

AND THE FORTUNE STAFF

ANGELA MERKEL has dominated Europes politics for a decade

now. She is the only Continental leader whose term in oce

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

MERKEL: HANS CHRISTIAN PLAMBECKLAIF/REDUX; SUU KYI:YE AUNG THU/AFP/GETTY IMAGES

A P RIL 1, 20 1 6

RITA MCGRATH
Columbia Business School

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

FRANCIS: ERIC VANDEVILLESIPA USA; COOK: ANDREW BURTONGETTY IMAGES; LEGEND: RYAN PFLUGERAUGUST IMAGES

POPE FRANCIS
HEAD OF THE ROMAN
CATHOLIC CHURCH

TIM COOK
CEO / APPLE

Pope Francis has the

distinction of being one
of three leadersalongside Amazon CEO Je
Bezos and Apple CEO Tim
Cookwho have made
Fortunes list every year
of its existence. This
past year has been the
year of Pope Francis the
diplomat. The rst Latin
American pope played
a key role in brokering
a deal between the U.S.
and Cuba, writing letters to both presidents
Barack Obama and Ral
Castro encouraging
the two nations to nd
common ground. For the
rst time ever, Francis
traveled to the U.S., to
deliver his message
of social justice in the
worlds most powerful
country. Francis dug
particularly sharply into
what he called the dung
of the devil, criticizing
the idolatry of money
and the dictatorship of
an impersonal economy
lacking a truly human
purpose. And his
Laudato si encyclical
calling for swift and
unied global action in
defense of the environment undoubtedly gave
momentum to the eort
that led to a global
climate change pact in
Paris in December.
The popes unapologetic advocacy on behalf
of the poor and the
environment has only
boosted his popularity
when he launched an
Instagram account in
March, he gained 1 million followers in under 24
hours. But the tension
between the Catholic
Churchs culturally
conservative adherents
and its more socially
progressive followers
remains among Franciss
trickiest managerial
challenges. He continues
to thread a tight needle,
making the church more
welcoming to LGBT worshippers and divorced
Catholics while assuring
traditionalists that he
isnt changing doctrine.

Tim Cook and other

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

DOV SEIDMAN
CHIEF EXECUTIVE /
LRN

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

John Legend
RECORDING ARTIST AND ACTIVIST / THE SHOW ME CAMPAIGN.

HE CAN BOAST A BEST-SONG OSCAR, 10 Grammys, and at

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

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

A P RIL 1, 20 1 6

CHRISTIANA FIGUERES
EXECUTIVE SECRETARY /
UN FRAMEWORK
CONVENTION ON
CLIMATE CHANGE

8
2

If Mother Nature held

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

Its either a high compliment to Paul Ryan or an

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

10

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

ASSOCIATE JUSTICE / U.S. SUPREME COURT

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

tural icon is an understatement. But thats exactly what has happened to Justice Ruth Bader Ginsburg. Thanks to a 2015 book
that in turn expanded on a law students fan site on Tumblr, she is
now known on the Internet, on T-shirts, and to young women everywhere as Notorious RBG. Deservedly praised for her intellect, skill, resilience, and strong voice on everything from voting
to womens rights, Ginsburgs leadership was never more on display than in the respect she showed after the passing of her colleague, friend, and ideological opposite, Justice Antonin Scalia,
earlier this year. In a political season when one could question our
capacity and even desire to nd common ground with those having opposing viewpoints, Ginsburg serves as an example for us all
in her ability to connect in the service of a mission more signicant than ones self-interest.
Dov Seidman, chief executive of LRN and author of How: Why How We
Do Anything Means Everything

FIGUERES: ANN HERMESTHE CHRISTIAN SCIENCE MONITOR/GETTY IMAGES; RYAN: DAVID ORRELL GETTY
IMAGES; HASINA: ANDREW BIRAJREUTERS; GINSBURG: NIKKI KAHNTHE WASHINGTON POST/GETTY IMAGES

The List

PAUL RYAN
SPEAKER / U.S. HOUSE
OF REPRESENTATIVES

Ruth Bader
Ginsburg

13

SERGIO MORO
FEDERAL JUDGE /
BRAZIL

Tencents WeChat social

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

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

ALABAMA FOOTBALL COACH

THE DYNASTY WAS OVER. That was

the consensus of the pundits after Alabamas 4337
loss to Ole Miss in its third
game of the season last September. The famed process that Crimson Tide
coach Nick Saban, 64, had
used to win three national
titles in football at Bama
while boosting graduation
rateshad run its course,
and the competition had
caught up. Saban challenged his team: How are
you going to respond?
When Alabama defeated
Clemson 4540 for another
title on Jan. 11, 2016, he had
his answer, and the dynasty
and Sabans legacy as a
leaderremained intact.

14

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

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

HUATENG PONY MA
CHAIRMAN AND CEO /
TENCENT

Nick Saban

APRIL 1, 201 6

SABAN: CHRISTIAN PETERSENGETTY IMAGES; MA; LINTAO ZHANGGETTY IMAGES; MORO: NELSON ALMEIDAAFP/GETTY IMAGES; BONO: SAMIR HUSSEINWIREIMAGE

12

11

8
3

Stephen Curry
and Steve Kerr
POINT GUARD AND HEAD COACH / GOLDEN STATE WARRIORS

The List

15

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

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

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

A P RIL 1, 20 1 6

16

8
4

18

17

BRYAN STEVENSON
FOUNDER / EQUAL
JUSTICE INITIATIVE

NIKKI HALEY
GOVERNOR /
SOUTH CAROLINA

At a moment when

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

While the most successful Republican pol builds

a following by stirring
resentment, Haley is
proving that Trumpism
isnt the only way. South
Carolinas Indian-American governor was among
the earliest in her party to
call out the GOP presidential front-runner, warning
against the siren call of
the angriest voicesin a
nationally televised State
of the Union response,
no less. Last summer,
following the massacre
of nine African Americans
in a Charleston church,
Haley engineered the
removal of the Confederate ag from state capitol
grounds, setting o a
movement across the
South to pack away the
charged symbol.

JUDITH RODIN
PRESIDENT /
ROCKEFELLER
FOUNDATION

Beyond New
York City,
Lin-Manuel
Mirandas
Hamilton is
capturing
imaginations
and challenging
assumptions
of how art is
created, and by
and for whom.

19

LIN-MANUEL MIRANDA
COMPOSER, LYRICIST,
AUTHOR / HAMILTON

MARVIN ELLISON
CEO / J.C. PENNEY

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

Not long ago, J.C.

Penney looked like
a failed department
store destined to die.
But Marvin Ellison, CEO
since August after nine
months as president, has
engineered a stunning
(if still early) turnaround,
improving store layouts,
xing e-commerce
operations, and chipping
away at Penneys huge
debt. Shares are up 75%
in 2016 on renewed
optimism about the company. And Ellison owes
much of his success to
his belief in talking regularly to his troops in the
eld rather than issuing
diktats from on high, an
approach that has galvanized a workforce still
traumatized by Penneys
near collapse.

CURRY AND KERR: EZRA SHAWGETTY IMAGES; STEVENSON: TAYLOR HILLGETTY IMAGES; HALEY: CHASE STEVENSAP IMAGES; MIRANDA: CINDY ORDGETTY IMAGES; ELLISON: NANCY NEWBERRY

couple of spindly, amiable, not-quite-tall-but-not-quite-short guys. We look at

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

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20

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

21

2
2

Scott Kelly and

Mikhail Kornienko

23

CREW MEMBERS / INTERNATIONAL SPACE STATION

A P RIL 1, 20 1 6
F O R T U N E . C O M / G R E AT E S T L E A D E R S

8
6

Larry Fink built Black-

Rock into the largest

investment rm in the
world, with $4.6 trillion in
assets under management. And two years ago
he took it upon himself to
redene the relationship
between the Fortune
500 and Wall Street. Fink
wrote a letter to the CEOs
of nearly every large company in America deploring
the corporate culture
of short-term thinking
and threatening to vote
out board members who
didnt hold management
accountable. Other large
investment rms have
followed BlackRocks
leadand Hillary Clinton
adopted a tax proposal,
similar to one Fink outlined, that would pressure
shareholders to hold their
investments longer.

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

spacecraft oated into a historic embrace. When the hatches

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

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

SAUJANI; CINDY ORDGETTY IMAGES; KELLY AND KORNIENKO: NASA VIA AP; FINK: SAM KANG LIBLOOMBERG VIA GETTY IMAGES;
MILIBAND: MATTHEW LLOYDBLOOMBERG VIA GETTY IMAGES

LARRY FINK
CEO / BLACKROCK

27

24

The List

CHAVEZ: TAYLOR HILLFILM MAGIC/GETTY IMAGES; HAYDEN: BARBARA HADDOCK TAYLORTHE BALTIMORE SUN/AP; MACRI: AMILCAR ORFALILATIN CONTENT/GETTY IMAGES; CULLORS, GARZA, AND TOMETI: BEN BAKERREDUX

RICK WARTZMAN
SENIOR ADVISER /
DRUCKER INSTITUTE

In decrying
companies
short-term
mind-set,
few voices
have been as
important or
as forceful as
Larry Finks.

25

ANNA MARIA CHVEZ

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

26

CARLA HAYDEN
LIBRARIAN OF CONGRESS
NOMINEE

MAURICIO MACRI
PRESIDENT /
ARGENTINA

In February, President Obama nominated Hayden to lead

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

For decades scal

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

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

MODERN SOCIAL MOVEMENTS often zzle after their moment in the

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

From left: Cullors,

Garza, and Tometi

29

Chai Jing
FREELANCE JOURNALIST / CHINA

The List
SMOG IS A DAILY PHENOMENON

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

AP R IL 1 , 20 1 6

30

8
8

JOHN OLIVER
HOST AND EXECUTIVE
PRODUCER / LAST
WEEK TONIGHT
Olivers

cerebral
deep dives into social
injustices on his HBO
show, Last Week Tonight,
have created a new form
factor in comedycall it
investi-comedy. There
isnt a topic he wont
tackle, from the plight
of chicken farmers to
native advertising to net
neutrality. He insists hes
no more than a comedian, but he has eected
change: His net-neutrality piece, for example,
was credited for a shift in
the FCCs position (and
for crashing the agencys
website). His merciless
preSuper Tuesday takedown of Donald Trump,
meanwhile, has been
viewed more than 22 million times on YouTube.

31

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

DAVID WESSEL
DIRECTOR / HUTCHINS
CENTER, BROOKINGS
INSTITUTION

32

33

ARTHUR BROOKS
PRESIDENT /
AMERICAN ENTERPRISE
INSTITUTE

ROSIE BATTY
FOUNDER / LUKE
BATTY FOUNDATION

If

One doesnt
have to agree
with Paul Ryan
on everything
and I dontto
admire his
ability to
articulate his
conservative
vision, to exhort
Republicans to
remember the
struggles of
those born into
poverty.

Moncef Slaoui has

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

the right is to have

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

On Feb. 12, 2014,

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

CHAI: TAO XIAOFANGIMAGINECHINA; OLIVER: EMILY SHURHBO; EDWARDS: MOLLY RILEYAP; BROOKS: DARREN MCCOLLESTERGETTY IMAGES; BATTY: DON ARNOLDWIREIMAGE; SLAOUI: GSK/FLICKR

in every major Chinese city. But

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

MONCEF SLAOUI
CHAIRMAN OF VACCINES
/ GLAXOSMITHKLINE

35

34

DENIS MUKWEGE
FOUNDER /
PANZI HOSPITAL

CHRISTINE LAGARDE
MANAGING DIRECTOR /
IMF

In the Democratic

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

The former French

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

37

38

39

MARC BENIOFF
CEO / SALESFORCE

GINA RAIMONDO
GOVERNOR /
RHODE ISLAND

AMINA MOHAMMED
MINISTER OF
ENVIRONMENT / NIGERIA

Americas smallest state

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

As special adviser on

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

ARMY RANGERS

If theres a poster boy for

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

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

WHEN GRIEST, a platoon leader, and

Haver, an Apache helicopter pilot, enrolled in the Armys notoriously grueling
Ranger School, they were simply soldiers. When they graduated in August
the rst women ever to do sothey
were icons. What got them through the
brutal regimen of runs, marches, and
other mental and physical trials? I was
thinking really of future generations of
womenthat I would like them to have
the opportunity, said Griest. Their accomplishment, astounding in its own
right, transformed the debate about
women in warfare, proving that women
can perform on the battleeld as ably
as men. And that undoubtedly buttressed the Pentagons December decision to open all combat positions to
womenwithout exceptions.

APRIL 1, 201 6

GRIEST AND HAVER: JESSICA MCGOWANGETTY IMAGES; MUKWEGE: MAXPPP/ZUMA WIRE; LAGARDE: MICHEL EULERAP; BENIOFF: JOHN
MEDINAGETTY IMAGES; RAIMONDO: PAUL MORIGIGETTY IMAGES; MOHAMMED: LEONARDO MUOZEP/CORBIS

Kristen Griest
and Shaye Haver

36

8
9

40

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

The List

HENRY CISNEROS
CHAIRMAN /
CITIVIEW

CO-CHAIR AND CEO / GATES FOUNDATION

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

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

A P RIL 1, 20 1 6

4
2

9
0

Melinda Gates and

Susan Desmond-Hellmann

Arvind Kejriwal
CHIEF MINISTER / NEW DELHI

WHEN KEJRIWAL UNVEILED a blueprint to

tackle the smog in New Delhicalled
the worlds most polluted city by the
World Health Organizationmany
were skeptical. A key component: an
odd-even pilot project in which vehicles were allowed on the roads only on
alternate days. The uplifting result of
the pilot this January: Roads were less
clogged, hourly particulate air pollution concentrations dropped by 13%,
and citizens could breathe deep.

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

$44.3 billion endowment to attempt to eradicate diseases like

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

43

44

45

JORGE RAMOS
JOURNALIST /
UNIVISION

MICHAEL FROMAN
U.S. TRADE
REPRESENTATIVE

MINA GULI
CEO / THIRST

For

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

Froman traces his

friendship with President

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

While some climaterelated threats can seem

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

LUCANO: MARIO LAPORTAAFP/GETTY IMAGES; GATES & DESMOND-HELLMAN: JOE PUGLIESEAUGUST IMAGES; KEJRIWAL: PARTHA SARKARXINHUA PRESS/CORBIS; RAMOS: BRYAN THOMASTHE NEW YORK TIMES/REDUX; FROMAN: FAZRY ISMAILEPA/CORBIS; GULI: COURTESY OF THIRST

For decades emigration

46

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

A P RIL 1, 20 1 6

ON
INTELS
ANDY
GROVE

9
2

In 1985, Andy Grove

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

RAMN MNDEZ
HEAD OF CLIMATE
CHANGE POLICY /
URUGUAY

CLARE REWCASTLE
BROWN
EDITOR AND FOUNDER
/ SARAWAK REPORT

In the 1970s oil

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

Through her website

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

47

48
Justin Trudeau

50

PRIME MINISTER / CANADA

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

AS THE POLITICAL systems of the

U.S. and Europe heave with

anger and dysfunction,
Canadas new Prime
Minister offers an upbeat
contrast. Having won election decisively in October,
Trudeau has rallied the
public behind ambitious
plans for climate change
he wants to reduce methane
emissions, which trap heat
at a far greater rate than
CO2and a pledge to resettle 25,000 Syrian refugees.
He is also moving to legalize
marijuana. And hes doing
it with a soft-swagger optimism thats rare in Western
democracies right now.

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

MENDEZ: JEON HEON-KYUN/EPA/CORBIS; SIMONS: JAMES VEYSEYCAMERA PRESS/REDUX; TRUDEAU: PATRICK AVENTURIERGETTY IMAGES; BROWN: ANDREW TESTATHE NEW YORK TIMES/REDUX; TOBGAY: DURSUN AYDEMIRANADOLU AGENCY/GETTY IMAGES; GROVE: ANNE KNUDSENGETTY IMAGES

The List

49




 
 


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No. 14 BONO

BY E L L E N M C G I RT

I WILL

9
4

Irish rock icon Bono leads a widely acclaimed,

data-driven, global organization that
inuences governments, rallies C-suites,
and raises hundreds of millions of dollars for
people living in poverty. Whats his secret?
An ability to convince others that they are the
true leaders of change, not him. Heres what
business can learn from a music legend.

APRIL 1, 201 6
F O R T U N E . C O M / G R E AT E S T L E A D E R S

Bono, photographed near his home outside Dublin in March 2016

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

9
5

No. 14 BONO

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

A P RIL 1, 20 1 6

WHY ISNT EVERYONE PROCLAIMING THIS TO THE HILLS?

Isnt this big news? Bono, lead singer of the Irish band U2,
is working the crowd. It is the fourth night of the Innocence
and Experience Tour in New York Citys Madison Square Garden, a multimedia spectacle with two stages, a catwalk, and
an untold number of cathedral-high digital screensa pageant of rock-and-roll theatricality that feels justiably epic
for a band that has sold 175 million records, won 22 Grammys, and notched the highest-grossing world tour in history.
But thats not the crowd Bono is working. As throngs of U2
faithful rush the arena for the July 2015 concert, the bands
55-year-old front man is at a makeshift meet-and-greet
three oors above and a world away. There, in a curtained,

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

SOURCE: IEA

9
6

pop-up sanctuary, behind rows of chairs and

rigging equipment, Bono embraces House
minority leader Nancy Pelosi. He claps a
fund manager on the shoulder and says
warmly, We are winning the ght against
AIDS. Statistics pour out of his mouth
like so much small talk as he welcomes the
30 or so gathered VIPs: The United Nations had just issued a report showing that
new HIV infections have fallen by 35%,
AIDS-related deaths by 41%, and millions
more people than expected are getting lifesaving medication. Bono relates the news
as if he is an infectious-disease expert,
not a rock star. As it happens, hes both.
Bono nds a potential ally in the crowd.
Its young Barbara Bush, the daughter of
former President George W. Bush and
granddaughter of the rst President Bush,
whom Bono wickedly prank-called from
U2s Zoo Tour concert stage in the early
1990s. All is forgiven. I saw your sister last
week, swollen with child, he says to Barbara Bush, talking about her twin, Jenna

Bush Hager. Absolutely beautiful she was!

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

APRIL 1, 201 6
F O R T U N E . C O M / G R E AT E S T L E A D E R S

Actions,
actions,
actions,
says Bono.
Its about
being useful,
and thats
what I want
to be.

9
7

No. 14 BONO

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

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

A P RIL 1, 2 0 1 6

10

0
2006

NEW HIV INFECTIONS

(YEARLY)
3.0 MILLION
2.5
2.0
1.5
2000
SOURCES: UN; GLOBAL FUND

9
8

2014

THROUGH GLOBAL FUND

SUPPORTED PROGRAMS

2014

more than the mission, was the strategy

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

theyre not. The training is in-depth and

sophisticated, teaching volunteers everything from the minutiae of the appropriations process to Capitol Hill etiquette, and
giving them congressional-level briengs
on health, education, and energy-security
issues in Africa.
As nonprots go, its constituency of
volunteers is surprisingly purpleneither
liberal blue nor conservative red, at least
in rhetoric. The organization, like Bono, is
thoroughly cloaked in bipartisan clotha
staunchly inclusive, make-no-villains enterprise. There is nothing quite like them
on the Hill, says Sen. Chris Coons of Delaware. They come every year. Theyre polite,
prepared, and persistent.
The cross-the-aisle approach found its
apex with Pepfar. The tale, indeed, is now
the stuff of legend on the Hillan Atticus
Finch tale of how Bono got North Carolinas
Sen. Jesse Helms to change his mind.
Bono, for his part, waves off the credit. I
dont accept that it was me, he says. But
I will say that we found a way to deal with
the supposed opposition by taking them
out of caricature. On the religious right in
the 1980s, there was no greater opponent
of AIDS funding than Helms, who railed
against the LGBT community as perverts
and as weak, morally sick wretches falling
prey to a gay disease. Bono was unfazed.
Tapping the network of evangelical faith
leaders whom he had worked with during
the debt-forgiveness campaign, Bono began to meet with conservative lawmakers
about Pepfar. It was a conversation of data
and faith, two languages with which he is
deeply familiar. We showed them the obvious similarity between HIV and the leprosy
of the early New Testament, he says. This
ght is not just foreign aid.
When he nally got to sit down with
Helms, he quoted Matthew 25, which talks
about suffering. There was nothing about
judgment there, says Bono. How could
addressing this disease not be at the center
of Christs mission? Thats where we ended
up. Helms welled up, offered a blessing,
and got to work. Not only did he change his
mind on AIDS funding, but he lobbied the
White House himself. Dick Cheney came

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No. 14 BONO

shouts the singer. The crowd goes wild.

Repeat steps one through three.
I DONT WANT to be in Heaven unless youre

all here. Again, Bono is working the crowd.

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

LEFT: FABRICE COFFRINIAFP/GETTY IMAGES; RIGHT: TARA TODRAS-WHITEHILL

into the Oval Office and said, Jesse Helms

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

years. Its been a unique way for us to

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

Far left: Bono poses

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

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Near left: Jane Anika

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

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No. 14 BONO

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

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

TOURING, EARNING
U2s 360 Tour, from
2009 to 2011, was the
highest-grossing tour of
all time, with a nal gross
of $736.4 million, according to Live Nation.

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

APRIL 1, 20 1 6

GO, GO, NGO

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

1
0
2

In 2004, Apple sold thousands of special-edition

U2 iPods and box sets; in
2014, Apple released its
Songs of Innocence for
free via iTuneswhich in
turn boosted sales of U2s
back catalogue.

and loads of gratitude for the contributions

of those in the room.
He is at once expected and surprising. I
have to remind myself every so often that
the man in the cool shades (which he wears,
by the way, to protect eyes that have been
troubled by glaucoma for two decades) is a
rock star. With 13 studio albumsseven of
which hit No. 1 on the Billboard charts
U2 is among the most successful bands in
rock history. Part of the secret to its success has been its independence. We own
our masters, we own ourselves, Bono says,
and the band members operate as equal,
collaborative artists, without the pressure
of corporate overlords.
They dont sound like anyone else, says
Tom Freston, the founder of MTV and
Ones board chair. And theyve been making music that resonates with people for
decades. But as Bono has grown in music
stature, he has also matured as a businessman. He co-founded Elevation, a private
equity rm created in 2004, a high performer thanks to investments in Facebook,
Yelp, BioWare, and Pandemic Studios. And
in 2014 he became a special partner in TPG
Growth, a global investment group with
$7 billion under management. The founder,
Bill McGlashan, had purchased Fender the
year before and asked Bono to join the guitar companys board. Bonos ability to think
strategically about Fenders future earned
him a fan in McGlashan.
For Bono there is a wondrous simpatico
between music, development work, and investing. And in each area his relentless drive
is unmistakable. When asked point-blank
about where this drive comes from, Bono
seems unsure. You know, he says, we have
a family prayer. And that is to be useful. He
falls silent. I think thats as close to it as I
can get to an answer.
BEING IRISH also plays an important part in

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

TIM MOSENFELDERGETTY IMAGES

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

APPLE, CORE

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

in Africa because it worked in Ireland.

Bono, born Paul Hewson, lost his
mother at 14, a heartbreaking event
that turned him toward art. It was
to heal the wound, he says. U2 has
been together since they were teenagers at the progressive Mount Temple
high school in Dublin. We couldnt
play our instruments, so we had to be
punk rockers. It was also where he
fell in love with Alison Stewart, whom
he would eventually marry. I met my
wife and my band in the same week,
he likes to say. Bono and Alison Hewson have four children: daughters Jordan, 26, and Eve, 24, who both live in
New York City, and sons Elijah, 16, and
John, 14. Living mostly in Dublin has
let Bono have a fairly normal life, close
to friends and family, including people
who arent all that impressed with the
rock star thing. One sore point is that
U2 has chosen to domicile one of their
companies in the Netherlands for tax
purposes. Hes defended the move publicly as smart business but doesnt wave
off the critique. I hear about things
down at the pub, all right, he says.
But make no bones, Bonos Irish
sensibility and sense of history seem to
give him a courage to act where others
might look away. Ten years ago, when
Bono rst visited University Teaching
Hospital in Kigali, there were three
people to a cot, another three underneath on the oor, and long lines of
desperate people waiting for a test to
conrm that they were going to die of
a disease that was being managed effectively in wealthier countries. No
medicine was coming. It resurrected
deep moral questions for Bono about
who gets access to life-saving medication and whyand how political indifference and systemic poverty are often
the only things condemning people to
terrible deaths. Why should where you
live determine whether you live?
Ten years later there is real cause to
be optimistic. The same facility now
has 560 beds in an orderly collection
of low, mostly single story buildings

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

APRIL 1, 20 1 6

No. 14 BONO

1
0
4

MUHTAR KENT
CEO / COCA-COLA

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

arranged by specialty: surgery, oncology,

maternity, and pediatrics. Some $70 million has come to Rwanda through carefully monitored programs funded by the
Global Fund. A countrywide health care
system that helps screen and support HIVaffected Rwandans, particularly in rural
areas, seems to be working. AIDS deaths
have been reduced from 13,000 in 2000
to 3,000 in 2014. Best of all, there were
only 36 known examples of mother to child
transmission of HIV in 2014.
Bono and his One co-foundersBritish activists Jamie Drummond and Lucy
Matthewtake a rare moment to enjoy the
progress when the delegation visits last August. (Bobby Shriver is the groups fourth cofounder.) Drummond, Matthew, and Bono
met during the Jubilee effort. Bandmates of
a different sort, theyve collaborated for so
long, they speak to each other in shorthand,
nishing each others sentences while they
huddle over laptops and plan strategy.
Drummond shares a story that describes
the way they have learned to think about
development work. In the 1990s I worked
on things called complex emergencies, he
says, massive humanitarian catastrophes
when the world seems at its worst: Ethiopia after the civil war, Afghanistan as the
Taliban was taking over, Rwanda after the
genocide. It feels important; its grim and
highly addicting work. The media shows
up; rock stars throw concerts. But what if
you could stop the emergency from happening? What if you could get ahead of it?
IF BONO HAS A MOTTO, hes adapted it from
St. Francis: Go into all the world to preach
the gospel, and if necessary, use words. I
love that one, he says. Actions, actions,
actions. Its about being useful, and thats
what I want to be.
This year One arranged for 200 of its volunteers to meet with 30 U.S. senators (or
high-level staffers), an extraordinarily high
number, to advocate for replenishing the
Global Fund, among other tasks. The training of next-generation leaders is critical for
the long-term prospects of the enterprise.
In order for this to be sustainable, it cant
depend on me, says Bono.

Interestingly, though, One is becoming

ever more dependent on something else:
Africa. There are more than 3 million One
members on the continent; it is the organizations fastest-growing cohort. And with this
shift in membership has come an evolution
of message: pushing the ask conversation
less toward nancial aid and more toward
assistance in development. After Rwanda,
Bono and his One/Red delegation visited
the CoCreation Hub in Lagos, an incubation
space for technology entrepreneurs with
a focus on social impact. Womens issues,
health, good governance, and anti-corruption ideas are in high demand, and everyone
is eager to address the nearly $1 billion in
oil revenue that goes missing every month.
What could that money do for the education sector? asks Owoicho Apochi Nelson,
education advocate and entrepreneur.
While the One team assembles a roundtable discussion on womens rights issues
in Nigeriaa major campaign of the group
is called Poverty is sexistBono says the
main goal of the trip is trade and entrepreneurship. That, he says, is the key to
ending extreme poverty on the continent.
Especially now, Africa needs jobs, millions
of them. But without outside investment,
which is typically afraid of the risks, its not
going to happen.
To that end, last June Bono began working with TPG-Satya, a new partnership specically focused on Africa investment. It was
born of a meeting at his home in Dublin with
McGlashan, his partner in TPG Growth, and
One board member, African investor and development expert Dr. Mohamed Mo Ibrahim. Its purpose it to nd smart investments
that can ethically operate at scale, creating
jobs along the way. Business investments can
also deliver social value, says Bono, sounding a refrain he repeats frequently. And for
anything we do in the least developed economies, I wont be taking a prot.
ON THE SECOND MONDAY IN MARCH, Bono and
the band are back in the studioif not quite
in prot mode, then in a creative one, hopefully. They are working on some new material for when the I+E Tour picks up again
later this year. U2s celebrated front man

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is getting all philosophical. We really were a band of thieves, he says of

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

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AN EXCLUSIVE
SNEAK PEEK
AT THE BOOK
DISRUPTED.

MY YE A R I N
S TA R T U P H E L L
HEAR THE ONE ABOUT THE UNEMPLOYED
MIDDLE-AGED GUY WHO TRIPPED AND FELL INTO
THE NEW ECONOMY?

BY
D A N LY O N S

108

FORTUNE.COM

April 1, 2016

about a laid-off, sad-sack, ftysomething guy who is

given one big chance to start his career over, the opening scene might begin
like this: a Monday morning in April, sunny and cool, with a brisk wind blowing off the Charles River in Cambridge, Mass. The mangray hair, unstylishly
cut; horn-rimmed glasses; button-down shirtpulls his Subaru Outback into
a parking garage and, palms a little sweaty, grabs his sensible laptop backpack
and heads to the front door of a gleaming, renovated historic redbrick building.
It is April 15, 2013, and that man is me. Im heading for my rst day of work
at HubSpot, the rst job Ive ever had that
wasnt in a newsroom.
HubSpots offices occupy several oors of a
19th-century furniture factory that has been
transformed into the clich of what the home
ILLUSTRATIONS BY
of a tech startup should look like: exposed
JAN FEINDT
IF YOU MADE A MOVIE

On the ground oor an enormous conference room doubles as a game room,

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

heads and seem to be eating it up. Most of

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

Book Excerpt: DISRUPTED

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

feels like landing on some

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

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Book Excerpt: DISRUPTED

Sergey Brin and Larry Page created the

Google search engine. Engineering came
rst, and sales came later. Thats how I
thought things worked.
But HubSpot did the opposite. HubSpots
rst hires included a head of sales and a
head of marketing. Halligan and Dharmesh
lled these positions even though they had
no product to sell and didnt even know
what product they were going to make.
HubSpot started out as a sales operation in
search of a product.
Another thing Im learning in my new job
is that while people still refer to this business as the tech industry, in truth it is no
longer really about technology at all. You
dont get rewarded for creating great technology, not anymore, says a friend of mine
who has worked in tech since the 1980s, a
former investment banker who now advises
startups. Its all about the business model.

The market pays you to have a company that scales quickly. Its all about getting big fast. Dont be protable, just get big.
Thats what HubSpot is doing. Thats why venture capitalists have sunk so
much money into HubSpot, and why they believe HubSpot will have a successful IPO. Thats also why HubSpot hires so many young people. Thats what
investors want to see: a bunch of young people, having a blast, talking about
changing the world. It sells.
Another reason to hire young people is that theyre cheap. HubSpot runs
at a loss, but it is labor-intensive. How can you get hundreds of people to
work in sales and marketing for the lowest
possible wages? One way is to hire people
who are right out of college and make work
seem fun. You give them free beer and foosball tables. You decorate the place like a cross
between a kindergarten and a frat house. You
throw parties. Do that, and you can nd an
endless supply of bros who will toil away in
the spider monkey room for $35,000 a year.
On top of the fun stuff you create a mythology that attempts to make the work
Excerpted from
Disrupted: My Misadventure in
seem meaningful. Supposedly millennials
the Start-Up Bubble, by Dan
dont care so much about money, but theyre
Lyons, which is being published
very motivated by a sense of mission. So, you
by Hachette Books on April 5.
give them a mission. You tell your employees
Copyright 2016.
how special they are and how lucky they are

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to be here. You tell them that its harder to get a job here than to get into Harvard and that because of their superpowers they have been selected to work
on a very important mission to change the world. You make a team logo. You
give everyone a hat and a T-shirt. You make up a culture code and talk about
creating a company that everyone can love. You dangle the prospect that some
might get rich.
in late 2014, I stop by my bosss desk and tell him Ive been
offered a new job. I wont start until January, but I am giving him six weeks
notice. He asks me to reconsider. I tell him I appreciate the offer, but Ive
made up my mind.
Soon, I know, word will get out that I am graduating. Its a strange but somehow satisfying feeling to know that, roughly three decades after my college career has ended, I am set to go through that ritualized departure once more. I am
going to be like so many other HubSpot graduates Ive seen come and go over
the past several monthsusing my superpowers in the next big adventure!
But the email that Cranium sends to the HubSpot faithful that evening
doesnt mention anything about any of that. It just implies that Ive been
redand that Friday will be my last day.

O N E T H U R S D AY

HubSpot led for an IPO on Aug. 25, 2014, and launched under the symbol
HUBS on the New York Stock Exchange that October, with a market valuation of $880 million. Dan Lyons left HubSpot in December 2014. He never
signed the nondisparagement and nondisclosure paperwork the company gave
him. (HubSpot says it wont comment on employee agreements.) On July 29,

OD Global offers:

2015, HubSpot issued a press release saying

its CMO, Mike Volpethe man called Cranium in Lyonss bookhad been terminated
because he violated the Companys Code
of Business Conduct and Ethics in his attempts to procure a copy of a book involving HubSpot, presumably the book excerpted
above, a fact that HubSpot conrmed with
Fortune. We attempted by email and telephone to contact Mr. Volpe for comment; we
were unable to reach him. When asked for
comment on Lyonss experience at the company, HubSpot CEO and co-founder Brian
Halligan said the following: We believe that
to build a great company today, its essential
to have a point of view on how the world has
changed, what you are doing about it and
why it matters. We started HubSpot a decade
ago believing that the way people buy and
sell had fundamentally changed. We saw
an opportunity to help organizations adjust
to that shift, and today were proud to have
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April 1, 2016

while you were out

How to Kill
a Good Idea

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

Good ideas are deeply

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

2. DEPOSITING IT WITH THE WELLMEANING BUT POWERLESS: Earnest

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

Follow Stanley Bing at stanleybing.com and on Twitter

at @thebingblog.

Fortune (ISSN 0015-8259) is published monthly, with extra issues in March, June, September, and December, by Time Inc. Principal ofce: 225 Liberty St., New York, N.Y., 10281-1008. U.S. subscriptions: $22.00 for one year. Member, Alliance for Audited Media. POSTMASTER: Send all UAA to
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116

FORTUNE.COM

illustr ation by gu y shield

are complex entities.

There are many people working for
them, usually. And by many I mean
more than two. This creates politics
and conicting agendas and fuels
the constant battle between forward
momentum and inertiawith proponents on both sides.
Somewhere in all of that, an idea
is occasionally born. A little ower
pops its delicate head up through the
organizational macadam and, against
all odds, succeeds in blossoming into a
healthy plant. Most of the time, though,
somebody comes along with a heavy
vehicle and runs over it.
Given that reality, its important to
review why and how organizations kill ideas. I hope you nd
this exercise helpful the next time you want to be the one driving the truck. Or when your ower is about to get crushed. To
begin, lets look at some reasons an idea might get killed.
1. ITS BAD: 85.4% of all ideas are useless, time wasting,
distracting, aggravating to too many people, dangerous,
boneheaded, or just plain superuous. Unless they come
from a senior officer, they are easily squelched.
2. YOU DIDNT THINK OF IT: Other peoples ideas are a drag,
arent they? You were doing something else. Now you have to
think about this? Forget it.
3. IT THREATENS YOUR TERRITORY: Sure, its an intriguing
notion. But executing it would put Bob or Barbra into your
meeting zone. Who needs them in there?
4. IT CONFLICTS WITH SOMETHING YOURE DOING: Like
lunch. Or vacation. Or that trip to L.A. Or whatever, right?
5. OSWALD THOUGHT OF IT: And you hate that preening
little weasel.
6. YOURE AN INSECURE WEASEL YOURSELF: Other people
may get the credit, and theres only so much credit to go around!
7. ITS INCONSISTENT WITH PREVAILING CULTURE: In the
80s, you had to be for excellence. In the 90s, you had to be for
greed. Now you have to like disruption and open offices. Any
contradictory notions must be terminated.
CORPORATIONS

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