Philippa Kaur

“WHEN YOU gaze into TikTok, TikTok gazes into you,” wrote Eugene Wei, a tech blogger, in 2020, explaining the almost clairvoyant nature of TikTok. What the algorithm sees as it gazes into your columnist, a neophyte user, is anyone’s guess: a random feed delivers tips on how to design a ball gown, someone barking at a dog, Rod Stewart with a hankie on his head, and (phew!) Maya Angelou reciting “Phenomenal Woman”.Schumpeter is quite clear, however, about what he sees in TikTok. It is not just the busty seductiveness of many of the clips that he cannot help noticing. It is the serious money changing hands. And the unmistakable thrill of creative destruction.About time. Just five years after its birth, TikTok claims to have exceeded 1bn monthly users, despite a ban in India. On January 12th App Annie, a data gatherer, said TikTok caught up with Facebook in 2021 and overtook WhatsApp and Instagram in time users spent on it. Notwithstanding a judge’s decision on January 11th to allow America’s Federal Trade Commission to sue Meta, the social-media trio’s parent company, on antitrust grounds, TikTok’s success appears to mock the argument that Facebook is impregnable.TikTok derives its magic from its algorithm and the data on which it is trained. Unlike Facebook’s rolling feed, TikTok’s simple, one-video interface means that the app always knows exactly what a user is watching. Clips are short, so viewers see a lot of them, generating plenty of information. This, combined with few friends and family clogging up the feed, allows the algorithm to match users with content creators that actually entertain them. And because videos are mostly shot on a smartphone, anyone can make them. Barriers to entry are low. Virality is high.A big question remains. Can TikTok win business as well as it woos eyeballs? Its provenance has long suggested it can. It is born out of ByteDance, a privately held Chinese powerhouse that some think generated more than $40bn in revenues in 2021. Its sister app, Douyin, has thrived in China’s hyper-competitive social-media market, which makes Silicon Valley look staid by comparison. That gives TikTok hands-on commercial experience to draw on.So far its revenues, though growing fast, are reportedly low (it discloses no financial information). That is unsurprising. Donald Trump’s abortive attempt in 2020 to ban it on national-security grounds scared away advertisers. The ensuing drama—a thwarted sale, management upheaval and uncertainty over its relationship with ByteDance—caused yet more disarray. But these hurdles now appear to be behind it. In the absence of further geopolitical turmoil, TikTok could shake up the business model of social media in America, not just the user experience.There are several ways it could do so. Start with advertising. Google and Facebook pioneered the pay-per-click approach. TikTok is transforming it further, inviting brands to work with creators to make potentially viral content, such as skateboarders swigging Ocean Spray juice to the sound of Fleetwood Mac. Sometimes a brand’s presence might only be visible via a hashtag.Second, e-commerce. Like other American social-media platforms, TikTok now enables viewers to buy goods directly by tapping a shopping tab on a video. It has teamed up with Shopify, an e-commerce platform, to bring more merchants to the site. So-called social commerce—including via live streaming—is far bigger in China than in America. Jeremy Yang of Harvard Business School says TikTok may build on Douyin’s experience in this field to bolster its online-shopping business.Third, the creator economy. It is not just that, according to Forbes magazine , TikTok’s seven highest-paid stars earned a total of $55.5m from work on and off the platform last year, triple the sum it counted in 2020. TikTok has also recently introduced ways for users to provide gifts and tips to favoured creators, boosting the incentive to produce fresh material and providing fees to TikTok. Such practices first took off in China.None of these innovations will amount to much if TikTok has another near-death experience. That is why it appears to be putting a final piece of its commercial strategy into place: balancing the demands of America and China. It has appointed Shou Zi Chew, a Singaporean of Chinese ethnicity, as CEO. He is based in the city-state, which serves as neutral territory. He is comfortable on both sides of the Sino-American divide, having been educated in the West and served as chief financial officer of ByteDance and Xiaomi, a Chinese smartphone-maker. It is still an open question whether he can—or even should—further disentangle TikTok from ByteDance to curb the perception that China could make nefarious use of TikTok’s data. To do so may help geopolitically. But cutting TikTok off from an army of Chinese software engineers could also jeopardise its mind-reading brilliance.TikTok faces plenty of other challenges. It needs to invest heavily in content moderation to ensure toxic videos are removed before they go viral. Addiction is a palpable concern, not just as a meme—#tiktokaddict has more than 500m views. The app faces probes about data privacy, particularly of under-age users. Regulatory risk will rise as TikTok becomes more prominent.One thing TikTok need not fear is being crushed by the big beasts of Silicon Valley (at least without help from Uncle Sam). Instagram has sought to mirror TikTok with “Reels”, and YouTube, owned by Google’s parent company, Alphabet, has introduced “Shorts”. Neither has damaged TikTok’s popularity.#LessonforChinaThat is a good thing. TikTok is on the vanguard of ideas pioneered in China’s video-mad social-media landscape that have taken years to permeate America. At a time when the Chinese Communist Party is arbitrarily cracking down on the consumer-tech industry it is especially gratifying to witness Chinese free enterprise and ingenuity grab the world’s attention. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “Creative seduction” More

CALLS FOR the oil business to decarbonise are growing louder everywhere, and not just from governments and environmentalists. Moody’s, a rating agency, reckons that half of the $1.8trn in the energy industry’s global debt stock that it evaluates is held by asset managers and insurers who face increasing pressure on environmental, social and governance (ESG) fronts, notably the climate. An annual survey of 250 big institutional investors published on January 6th by the Boston Consulting Group (BCG) found that more than four in five think it is important for firms to establish targets for long-term emissions reductions. Nearly as many “feel increased pressure” to apply green filters to investments.At the same time, the International Energy Agency, a global forecaster, expects worldwide oil consumption to return to its pre-pandemic level of 100m barrels a day (b/d) in 2022. Even if it rose by no more than 1% a year after that, the natural rate of reservoir depletion means that 12m-17m b/d of new supply must be added in the next five years to meet demand, reckons Alastair Syme of Citigroup, a bank. Investors recognise this. As economies reopened last year after the worst ravages of the pandemic and the oil price recovered—this week it is flirting with a seven-year high of $85 a barrel—energy became the best performing sector in the S&P 500 index, ahead of technology and finance. It left environmentally friendly stock picks in the dust (see chart).This tension was on display last month at the World Petroleum Congress in Houston, a triennial celebration of hydrocarbons attended by more than 1,000 energy ministers, oil bosses and other industry luminaries. Houston’s mayor, Sylvester Turner, kicked off the proceedings by declaring that “as the energy capital of the world, we have a moral obligation to reduce carbon emissions.” Shortly afterwards Amin Nasser, chief executive of Saudi Aramco, the world’s oil colossus, warned of inflation and social chaos unless countries accept that “oil and gas will play an essential role during the transition”. Between visits to booths where oil firms from Aramco to ExxonMobil, an American supermajor, competed to look lower-carbon than rivals, attendees could be heard wringing their hands about falling capital spending on exploration and production, which declined from around $500bn globally in 2019 to $350bn in 2020. Daniel Yergin, a Pulitzer-prizewinning energy wiseman at IHS Markit, a consultancy, warned that “pre-emptive underinvestment” risks hurting the world economy.Not in concertListen closely, though, and the cacophony reveals the mix of strategies that big oil is pursuing as it looks ahead to the next decade and beyond. The Europeans are increasingly going all in on greenery. The state-controlled giants such as Aramco are biding their time. And the Americans are engaged in a delicate balancing act somewhere in between.The European firms’ approach represents the sharpest break with the past. They are divesting many oil assets, especially the dirtiest ones, and replacing them with bets on green-power generation. In December Shell, a British giant, completed a $9.5bn sale of shale fields in the rich Permian basin. Britain’s BP and France’s TotalEnergies have sold off, respectively, some $3bn and $2.3bn in assets since October 2020.Bernard Looney, BP’s boss, has defended his firm’s shift by insisting that “this isn’t charity, this isn’t altruism.” Perhaps. But nor is it as good a business as pumping oil. IHS Markit estimates that global investments in oil and gas have generated a median annual operating return on capital of 8.3% since 2010, compared with 5% for renewables. Moreover, green energy is unfamiliar territory for the oil companies, where they face stiff competition from incumbents such as Orsted and Vestas, two European renewables giants. One analyst calls it the “low return, low regret” strategy.By contrast, the national oil giants’ approach could be summed up as “high returns, no regrets”. The Persian Gulf behemoths, led by Aramco, have the biggest conventional oil reserves and lowest costs. In an ironic twist of geology, Saudi Arabia’s oil reserves are also among the least carbon-intensive to develop. Largely impervious to pressure from shareholders and environmentalists, their share of global oil investments has risen from around a third in the early 2000s to more than half. According to Bob Brackett of Bernstein, an investment firm, the dilemma for the state-controlled behemoths is how to keep oil prices high without choking off demand.American oil companies cannot afford to be as patient as the Gulf petro-states. They also reject the European retreat from crude. Their strategy involves mopping up some of the industry’s emissions. But its centrepiece is trying to become ever more efficient at pumping oil while resisting the urge to splurge on new capacity whenever oil prices rise.The American firms’ decarbonisation drive is different from the European one in two ways. They are funnelling far less of their future capital spending to low-carbon projects compared with counterparts across the Atlantic. And the lion’s share is not going on ventures that replace hydrocarbons but on limiting or offsetting the companies’ climate impact.Most of America’s big oil companies have plans to limit leaks of methane, a powerful greenhouse gas, from their pipelines and produce hydrogen, a promising clean fuel, from natural gas. ExxonMobil is spearheading a proposed $100bn carbon-capture-and-storage consortium. Analysts observe that shallow-water leases in the Gulf of Mexico that the firm recently acquired do not fit with its oil strategy but are suited to storing carbon dioxide. More ambitiously still, Occidental Petroleum is helping scale up the world’s largest “direct air capture” facility to suck carbon dioxide from the air, whose construction will begin later this year in the Permian. “There is no more arguing…climate change is real and we have to address it,” insists Vicki Hollub, Occidental’s boss.In time, such projects may play a role in cleaning up the climatic mess that the oil industry has had a hand in creating. For now they remain a sideshow and, in the candid words of one American oil boss, “provide cover” for investors who need to genuflect to ESG activists. Indeed, both the shareholders and managers of America’s oil companies have a clear primary objective—to milk the high oil prices without succumbing to capital indiscipline that has often followed periods of pricey crude.Nowhere is this clearer than among the country’s shale producers. S&P Global Platts, a research firm, points to big improvements in productivity and efficiency in America’s shale patch, which contains some of the world’s cheapest remaining hydrocarbon stores. The time required to get new projects online has shortened dramatically in the past few years. Costs have fallen, too. Many shale producers now generate cash when the oil trades at $40 a barrel, down from a “breakeven” price of $80 a barrel a decade ago.Doing frackin’ greatShale firms made more money last year with oil at $70 a barrel than they had when prices surpassed $100 in 2014. Having burned through $150bn in cash from 2010 to 2020, they will generate cumulative cashflow of nearly $200bn between 2010 and 2025, reckons IHS Markit. Devon Energy, a big shale operator, has managed to cut its operating expenses in the Permian by nearly a third since 2018. That, plus roughly $600m in annual savings from a merger with WPX, a rival, has pushed its breakeven point down to as low as $30 a barrel, boasts its chief executive, Rick Muncrief.Mr Muncrief attributes his firm’s sparkling stockmarket performance last year—when its shareholder returns approached 200%—in part to its pioneering use of variable dividends, which promise investors both a traditional fixed payout and a share of free cashflow when oil prices surge. Scott Sheffield, Mr Muncrief’s opposite number at Pioneer Natural Resources, a rival company, adds that the growth-at-all-costs mindset that led to several shale crashes in the past has been replaced by “a new investor contract”. This puts returning cash to shareholders ahead of debt-fuelled expansion. Moody’s calculates that shale producers’ ratio of debt to gross operating profit will fall to 1.8 this year, down from 4.4 in 2020.It could all come undone. The oil price could crash. Or the companies could revert to their undisciplined ways. In a report published on January 11th America’s Energy Information Administration forecast that shale production will hit a new record in 2023.For now, though, the American strategy seems to be working, whether or not it is good for the climate. At the start of the year American oil firms’ shares were trading at a 69% valuation premium relative to those of their European peers, according to Bernstein. Companies that focus on finding oil and pumping it from the ground have done especially well. An index of such “upstream” firms compiled by Bloomberg, a data provider, shot up by 86% last year, the biggest annual gain since its creation in 1995 and far outpacing the 55% rise in the oil price. This implies that the soaring share prices do not reflect a temporary windfall. For all their low-carbon talk, in other words, investors are not giving up on oil—and American oil bosses know it.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

TECH AND health care have a fraught relationship. On January 3rd Elizabeth Holmes, founder of Theranos, a startup that once epitomised the promise of combining Silicon Valley’s dynamism with a stodgy health-care market, was convicted of lying to investors about the capabilities of her firm’s blood-testing technology. Yet look beyond Theranos, which began to implode way back in 2015, and a much healthier story becomes apparent. This week a hoard of entrepreneurs and investors will gather virtually at the annual JPMorgan Chase health-care jamboree. The talk is likely to be of AI, digital diagnostics and tele-health— and of a new wave of capital flooding into a vast industry.Clunky, costly, highly regulated health systems, often dominated by rent-seeking middlemen, are being shaken up by companies that target patients directly, meet them where they are—which is increasingly online—and give them more control over how to access care. Scientific advances in fields such as gene sequencing and artificial intelligence (AI) make new modes of care possible. E-pharmacies fulfil prescriptions, wearable devices monitor wearers’ health in real time, tele-medicine platforms connect patients with physicians, and home tests enable self-diagnosis.The prize is gigantic. Health care consumes 18% of GDP in America, equivalent to $3.6trn a year. In other rich countries the share is lower, around 10%, but rising as populations age. The pandemic has made people more comfortable with online services, including digitally mediated care. Venture capitalists detect a sector that is uniquely ripe for disruption. CB Insights, a data provider, estimates that investments in digital-health startups nearly doubled in 2021, to $57bn (see chart 1). Unlisted health-care startups valued at $1bn or more now number 90, four times the figure five years ago (see chart 2). Such “unicorns” are competing with incumbent health-care companies and technology giants to make people better and prevent them from getting ill in the first place. In the process, they are turning patients into consumers.Consumer health care has long been synonymous with over-the-counter painkillers, cough syrup, face creams or Band-Aids peddled by big drugmakers. In a recognition that their uninnovative consumer divisions have become a drag, Johnson & Johnson, America’s (and the world’s) most-valuable pharmaceutical company, and GlaxoSmithKline, a giant British rival, are spinning them off. The hope is that without the cross-subsidy from the more lucrative prescription-drug arms, the rump consumer businesses will spruce up and become more inventive. Some more adventurous incumbents are already experimenting with digitisation and consumerisation. Teva, an Israeli pharmaceutical firm which dates back to 1901, has developed a digitally enabled inhaler equipped with app-connected sensors that tell users if they are employing it properly.Left to their own devicesThe second group of companies with new consumer-health ambitions is big tech. After a series of abortive attempts to tiptoe into the health business—as with Google’s short-lived platform for personal health data, scrapped in 2011—the technology giants are finally finding their feet. According to CB Insights, Alphabet, Amazon, Apple, Meta (Facebook’s new parent company) and Microsoft collectively poured some $3.6bn into health-related deals last year. They are particularly active in two areas: devices and data.Deloitte, a consultancy, reckons that 320m consumer medical wearables will ship globally in 2022 (see chart 3). In 2020 Amazon unveiled its $100 Halo band. Last year Google acquired Fitbit, which makes a fancier fitness tracker, for $2.1bn. The latest Apple watch already offers an electrocardiogram (ECG) function and the iPhone-maker plans to throw in blood-oxygen sensors and a thermometer to help women track ovulation. The latest smartwatch from Samsung, Apple’s South Korean rival, sports ECG and blood-pressure monitors.The technology giants are also injecting health-related services into their cloud-based data-crunching offerings. To that end Microsoft paid $20bn last year for Nuance, an AI firm. Amazon Web Services, the e-emporium’s cloud arm, has also launched a health-care offering. Oracle, an increasingly cloud-based business-software firm, is finalising an acquisition of Cerner, a health-IT group for $28bn.Then there are the upstarts, which offer products and services of varying degrees of complexity. Some are simple online pharmacies. Truepill, a six-year-old American company valued at $1.6bn, now fulfils 20,000 prescriptions a day and runs last-mile logistics for a range of consumer-facing health brands. One is Hims & Hers Health, a big American e-pharmacy that went public a year ago via a reverse merger with a special-purpose acquisition company. Another is Nurx, which provides pre-exposure prophylactics for people at risk of contracting HIV. PharmEasy, an Indian online pharmacy, raised $500m in capital last year.Telemedicine firms, which offer a greater range of health services, have thrived as covid-19 has strained clinics’ capacity and put patients off in-person visits for fear of infection. China’s WeDoctor, a privately held operator of what it calls “internet hospitals” , was last valued at nearly $7bn. Teladoc, a listed American firm with a market value of $13bn, reported revenues of $520m in the third quarter of 2021, up by 80% year on year.Another, more sophisticated area experiencing rapid growth is at-home diagnostics. The Theranos scandal gave consumer diagnostics a bad name. Now better technology and greater realism about what it can achieve are rehabilitating the field, just as the pandemic has accustomed people to the idea of home-testing. This includes devices to analyse everything from blood sugar to stool samples. Levels Health, a two-year-old American startup, sells app-synced continuous glucose monitors directly to consumers, after seamlessly connecting them via the internet with prescribing doctors. Its founder, Josh Clemente, was inspired by having to ask a friend to smuggle such a monitor for him from Australia to confirm his hunch that he was, like one-third of Americans, pre-diabetic—in America the devices were available only on prescription to people with uncontrolled diabetes. The startup’s waiting list now stretches to 145,000 people. Digbi Health, another American firm, uses fecal matter to analyse its customers’ gut microbiome to promote gastrointestinal health. Skin+Me, a British one, uses selfies to save people a trip to the dermatologist by providing prescription-grade skin care. Thriva, also from Britain, analyses blood from finger pricks to shed light on conditions such as high cholesterol and anaemia.Doctors on demandA big reason why it has taken so long for consumer technology to disrupt health care is that the highly regulated sector does not lend itself to Silicon Valley’s “move fast and break things” mentality. But recent years have shown that disruption is possible even in rule-bound industries. Hamish Grierson, was inspired to found Thriva after witnessing a digital shake-up in his old job in payments. Levels Health’s Mr Clemente, helped keep astronauts fighting fit at SpaceX, which has prised open the once government-dominated spacefaring business.One strategy is to position yourself as selling “general wellness” products to evade rigorous scrutiny, and only consult medical professionals for advisory purposes or to convince potential investors that their products are backed with science. Thriva, for example, says its blood tests offer “insights” rather than official diagnoses.Other companies, especially those with higher-tech offerings, are treading carefully. Manny Montalvo, who oversees “Digihaler” sales at Teva, insists it is not a consumer product. “This is still medicine and the right medicine has to be selected for the patient,” he says categorically. Apple sought clearance from America’s Food and Drug Administration (FDA) for its new watch’s ECG function.The regulators, for their part, are trying to move faster themselves. The newly minted FDA chief is a former adviser to Google Health, the tech giant’s health venture. The industry hopes that on his watch the agency will finally adopt long-delayed standards for digital-health software. Australia, Japan, Singapore and the EU have set out digital-health strategies in order to create similar standards for determining the quality, safety and clinical value of new health devices. More countries are adopting data-protection rules that ought to make it clearer to entrepreneurs, investors and consumers what data can be shared, with whom and how.The consumer-health boom has hit snags. Investors who pushed the share prices of online pill-peddlers and digital hospitals up whenever covid-19 spiked have cooled on such firms now that the coronaviral threat has receded somewhat. After exceeding $30bn at the start of 2021, Teladoc’s market value is back where it was before the pandemic hit in early 2020. The prospects of Hims & Hers, whose share price has declined by three-quarters in the past year, may have been additionally dented by Amazon’s launch in late 2020 of its e-pharmacy business. China’s digital-health companies have been caught up in the Communist Party’s broader tech crackdown. WeDoctor has shelved plans for a blockbuster initial public offering in Hong Kong. The Theranos saga offers a cautionary tale of how tricky biology is compared with swathes of computer science.Some products will turn out to be duds, and regulators may yet disrupt the disrupters. Still, as Scott Melville of the Consumer Healthcare Products Association, a trade body, puts it, “There is no going back to the old paternalistic system where you are relying exclusively on a medical professional for your health care.” Enterprising companies want to help people recover more quickly or, better yet, avoid getting ill in the first place. That is a negative prognosis for the hospital-industrial complex, which profits from the very sick. For everyone else, it is mostly a positive one. For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

THE PANDEMIC has been tough for parents of young children. With schools shut, many had to keep an eye on their offspring while juggling chores and remote work. Succour came courtesy of Hollywood. A study by Parrot Analytics, a data firm, found that demand for children’s shows in America—measured by video views, social-media mentions, searches on IMDB, a platform for film buffs, and the like—grew by nearly 60% from the start of 2020, before covid-19 hit, to last September (see chart). Demand for other genres rose by 23% in that period.At the same time, parental concerns about their progeny’s media diets have grown. A recent Pew survey found nearly half of parents saying that YouTube, the most popular destination for young audiences, exposed their children to inappropriate content. Many are chary of social-media apps such as TikTok, one-third of whose users may be under the age of 14, according to internal data seen by the New York Times.Fortunately, help is at hand. Disney, arguably the child-friendliest brand of all, has created a new role tasked with seeking out external children’s programming—part of a reorganisation to separate content creation from merchandising. Paramount+ is promoting its Nickelodeon trove to parents. Its own parent, Viacom CBS, is reportedly in talks to buy the “Alvin and the Chipmunks” franchise from its creators for as much as $300m.In September Netflix paid more than $700m for the Roald Dahl Story Company, which owns the rights to the eponymous author’s beloved tales such as “Charlie and the Chocolate Factory”. In November it announced the launch of Kids Clips, which offers curated short videos from its expanding slate of children’s programmes. Last autumn HBO Max, best-known for edgy grown-up fare, launched Cartoonito, a portal dedicated to pre-school shows.Upstarts are getting in on the action, too. Kidoodle. TV, an ad-supported app that specialises in children’s shows, has seen its downloads balloon during the pandemic. In November two former Disney executives agreed to pay $3bn for Moonbug Entertainment, the company behind hit programmes like “Cocomelon” and “Blippi”.Youth programming is attractive to streaming services for several reasons. Children’s television shows, especially animated ones, often cost less to produce than entertainment for adults, observes Erin Meyers of Oakland University. They tend to have a longer shelf life, too, since young children are less fussy than older viewers about what is hip at any given moment. And children’s programming offers vast merchandising opportunities in the form of toys. Most important, if you get it right you may be rewarded twice over: with current custom from grateful parents and, if their offspring like what they see, a guaranteed stream of future viewers. ■This article appeared in the Business section of the print edition under the headline “No child’s play” More

IN AN EPISODE of “Seinfeld”, a vintage TV sitcom, the character of George Costanza reveals the secret of pretending to work: act irritated. He shakes his head, frowns and sighs to demonstrate the technique. “When you look annoyed all the time, people think that you’re busy.” In comments posted below this clip on YouTube, visitors report with delight that the tactic really does work and offer a few tips of their own: walk around the office carrying manila envelopes, advises one.Before the pandemic turned everyone into remote employees, managers worried that working from home would be a paradise for slackers like George. People would be out of sight and out of mind: starting late, clocking off early and doing nothing in between. The reality of remote working has turned out to be different. Days have become longer and employees are demonstratively visible. Work has become more performative.The simple act of logging on is now public. Green dots by your name on messaging channels are the virtual equivalents of jackets left on chairs and monitors turned on. Calendars are now frequently shared: empty ones look lazy; full ones appear virtuous.Communication is more likely to happen on open messaging channels, where everyone can see who is contributing and who is not. Emails can be performative, too—scheduled for the early morning or the weekend, or the early morning on the weekend, to convey Stakhanovite effort. Repeated noises like Slack’s knock-brush provide a soundtrack of busyness.Meetings, the office’s answer to the theatre, have proliferated. They are harder to avoid now that invitations must be responded to and diaries are public. Even if you don’t say anything, cameras make meetings into a miming performance: an attentive expression and occasional nodding now count as a form of work. The chat function is a new way to project yourself. Satya Nadella, the boss of Microsoft, says that comments in chat help him to meet colleagues he would not otherwise hear from. Maybe so, but that is an irresistible incentive to pose questions that do not need answering and offer observations that are not worth making.Shared documents and messaging channels are also playgrounds of performativity. Colleagues can leave public comments in documents, and in the process notify their authors that something approximating work has been done. They can start new channels and invite anyone in; when no one uses them, they can archive them again and appear efficient. By assigning tasks to people or tagging them in a conversation, they can cast long shadows of faux-industriousness. It is telling that one recent research study found that members of high-performing teams are more likely to speak to each other on the phone, the very opposite of public communication.Performative celebration is another hallmark of the pandemic. Once one person has reacted to a message with a clapping emoji, others are likely to join in until a virtual ovation is under way. At least emojis are fun. The arrival of a round-robin email announcing a promotion is as welcome as a rifle shot in an avalanche zone. Someone responds with congratulations, and then another recipient adds their own well wishes. As more people pile in, pressure builds on the non-responders to reply as well. Within minutes colleagues are telling someone they have never met in person how richly they deserve their new job.Theatre has always been an important part of the workplace. Open communication is a prerequisite of successful remote working. But the prevalence of performative work is bad news—not just for the George Costanzas of the world, who can no longer truly tune out, but also for employees who have to catch up on actual tasks once the show is over. By extension it is also bad for productivity. Why, then, does it persist?One answer lies in the natural desire of employees to demonstrate how hard they are working, like bowerbirds with a keyboard. Another lies in managers’ need to see what everyone is up to. And a third is hinted at in recent research, from academics at two French business schools, which found that white-collar professionals are drawn to a level of “optimal busyness”, which neither overwhelms them nor leaves them with much time to think. Rushing from meeting to meeting, triaging emails and hitting a succession of small deadlines can deliver a buzz, even if nothing much is actually being achieved. The performance is what counts.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “Office theatrics” More

RESTAURANT AND hotel bosses have had a tough year. Some 700,000 hospitality workers threw in the towel on average each month in the past year. Bars, cafés and eateries are 1.3m workers short relative to the 16.9m employed before covid-19. On January 4th the Bureau of Labour Statistics reported that a record 4.5m Americans quit their jobs in November, 9% up on a month earlier. The quit rate in leisure and hospitality jumped by a percentage point, to 6.4%. Uncertainty from the Omicron variant may make matters worse: as cases surged in December, restaurant footfall fell sharply, according to OpenTable, an online booking website.As in other industries, workers in hospitality are leaving for various reasons, from fear of infection to better opportunities elsewhere. But one big motive is burnout. Psychological exhaustion is more often associated with hard-charging investment bankers and other professionals. Amid the pandemic it has afflicted many blue-collar workers, too.Surveys find that chronic stress is a growing concern across the labour market, but dissatisfaction is especially high in service roles, where hybrid work is not possible. Data collected by Glassdoor, an employment portal, found that employees rate the hospitality sector as one of the worst for work-life balance. Mentions of “burnout” in reviews of employers on the site have doubled during the pandemic. Workers report that new tasks such as dealing with angry customers and enforcing health mandates have added to the burden.Work in restaurants and hotels can be physically taxing, poorly paid and unpredictable. Unlike white-collar workers, who suffer from needing to be constantly available, service workers burn out as a result of uncertain schedules and a lack of control over time, says Ashley Whillans of Harvard Business School. Ian Cook of Visier, a human-resources-analytics firm, says that time off during lockdowns gave employees an opportunity to reflect on their relationship with “fragile and meagrely paid work”.Firms have scrambled to respond. Many food and accommodation businesses have raised wages—by an average of 8.1% year on year in the third quarter, the highest increase on record. That may not be enough. In one poll of hospitality workers, over half said higher pay will not lure them back by itself. Large retailers such as Amazon and Target, which require many of the similar skills, are poaching hospitality staff by offering non-cash perks like subsidised college education, parental leave and career advancement. Most restaurants cannot afford to match such offers.Daniel Zhao, an economist at Glassdoor, foresees a permanent reduction to the hospitality workforce. “High turnover tends to be contagious,” he says, and early resignations can start a vicious cycle. As some workers quit, those who remain must pick up the slack, leading to more stress. This in turn provokes more exits, and so on. Add an ageing population, with dwindling numbers of young people prepared to toil in kitchens or sweep hotel corridors, and hospitality businesses may be contending with blue-collar burnout for years to come. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “Blue-collar burnout” More

SINCE 2008, when General Motors’ then boss delivered a keynote speech at the Consumer Electronics Show (CES), an annual technology jamboree, Las Vegas has offered a glimpse of carmaking’s digital future. This year nearly 200 automotive firms signed up for the event, which got cracking on January 5th. That day GM’s current chief, Mary Barra (pictured), addressed a mostly online, Omicron-avoiding crowd. Like other big carmakers, GM did not show up in person. But Ms Barra’s virtual CES outing signalled how rapidly cars are evolving from oil-filled lumps of metal into devices stuffed with silicon.Ms Barra talked about GM’s transformation from “automaker to platform innovator”, extolled its advances in commercial electric vehicles (EVs) and autonomous driving, and unveiled a battery-powered version of the Chevrolet Silverado pickup. Rival firms raced to appear even more innovative. BMW demonstrated a system that changes a car’s paint colour at the press of a button. Mercedes-Benz went so far as to claim that its Vision EQXX concept, with interior materials fashioned from bamboo, cactus and mushroom, and a battery-powered range of 1,000km, was “reinventing the car”. Not to be outdone, consumer-electronics giants strutted their automotive stuff. Sony, a Japanese one, surprised many attendees when it announced a possible foray into carmaking (though it may merely use the experience to develop EV and self-driving tech to sell to others).Other announcements were less flashy but more telling when it comes to the digitisation of carmaking. Mobileye, the self-driving arm of Intel, which supplies chips to many big car firms, announced expanded deals with Ford, Geely and Volkswagen. Qualcomm, another chipmaker, inked new ones with Volvo, Honda and Renault.The courtship between carmakers and chip firms will only intensify. The worldwide chip shortage that knocked nearly 8m units off global car output is thankfully easing and annualised global car production could return to pre-pandemic levels by the second half of 2022, according to Evercore ISI, an investment bank. Still, car bosses are desperate to avoid a repeat. Many look enviously at Tesla, whose own intimate rapport with semiconductor suppliers buoyed its full-year output for 2021 to a total of 930,000 vehicles. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “Motor Sin City” More

AFTER SEVEN days of deliberation and a flurry of notes to the judge about deadlock, a 12-member jury in Silicon Valley found Elizabeth Holmes, the entrepreneur behind a once promising phlebotomy startup, guilty of four counts of fraudulently deceiving investors. Each count carries a prison term of up to 20 years. She was acquitted of four charges of deceiving patients and doctors; on three others the jury were deadlocked leading to a potential re-trial. The verdict, against which Ms Holmes’s lawyers are expected to appeal, marks the fall of a career that beguiled the media, politicians and many in business.After dropping out of Stanford in 2003 at the age of 19, Ms Holmes had founded Theranos to develop a radical advance in blood-testing technology that she hoped would allow hundreds of tests to be performed using a tiny drop of blood rather than a vial. It was a tantalising vision that promised to make health care more effective and efficient. Unfortunately, Ms Holmes could not bring it to fruition. In voting to convict on four counts, the jury concluded that, aware of her company’s failures, Ms Holmes intentionally lied about its prospects and capabilities, and so crossed the fine line from simple promotion to deliberate fraud—a step she explicitly denied in her public testimony.The verdict will hardly be the end of Ms Holmes. There is sentencing to come, and possibly insights from jurors who sat through more than three months of testimony. And then there will be a tsunami of media, including a planned Hollywood blockbuster. A sentencing date has not yet been set.In a lot of ways Theranos differed little from many startups. It raised upwards of $1bn, reached a high theoretical valuation (in its case $9bn) before crashing without ever going public, disintegrating into a vast graveyard of unfeasible ideas. Usually, executives in these ventures are quickly forgotten but Ms Holmes’s path differed at least in part because even if her company’s products failed, her presence and broader story proved unusually compelling.In building Theranos, Ms Holmes assembled a remarkable collection of acolytes. Her board was filled with several former secretaries of state and defence. Joe Biden, while vice-president, called Theranos “the laboratory of the future” and Ms Holmes “an inspiration”. The company’s shocking failure suggested her famous followers had fed merely on hype. The fashion press was besotted by Ms Holmes’s ability to present herself. The Steve Jobs-inspired black turtlenecks worn while running Theranos were seen as reflecting authority. The open-necked shirts and blouses she wore during the trial were a sign of appealing vulnerability, augmented by the nappy bag she carried to court, which signalled to the jury the cost to a young mother (her child was born last July), were they to convict her and send her away. Reporters and others waited for hours to gain a rare sought-after seat at her trial.Ms Holmes’s defence followed two distinct lines. The most obvious hinged on naivety. She may have been wrong about Theranos’s prospects, the argument went, but that is not a crime. Start-up investors are supposed to be a sophisticated lot, willing to wager based on deep insights in the hope of a big return, while understanding that longshots fail. Surely the doctrine of caveat emptor still exists?Key to the prosecution were the presentations Ms Holmes made to investors, which appeared to exaggerate potential sales and trumpet non-existent endorsements from the armed forces and big pharmaceutical companies. The single substantive request made by the jurors during their deliberation was to rehear a presentation that had been recorded, suggesting they were focused on precisely what she said.Ms Holmes’s second line of argument, the so-called Svengali defence, was particularly appealing to Hollywood, but its impact on the jury was unclear. She claimed at the trial to have been sexually and emotionally abused and manipulated by Ramesh “Sunny” Balwani, her partner and Theranos’s former chief operating officer. If true, was she then even responsible for her actions? And if true, what sort of inspiration was she really?Mr Balwani has strongly denied all allegations. His own trial for fraud charges will begin next month, ensuring the overall case will not end soon. And even after the last gavel is pounded, there will be more to come. In the lead-up to the verdict Hulu, a cable network, released photos from an upcoming mini-series on Ms Holmes’s story, starring Amanda Seyfried. Ms Holmes may be going to jail, but she will not be going away.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More