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WILL GOOGLE’S ALPHA BET PAY OFF? 6 Ways Alphabet

CEO Larry Page is reinventing his company to beat APPLE, FACEBOOK & MICROSOFT

WOR LD CHANGING IDEAS ISSUE

14 Food Innovators Changing the Way We Eat Starbucks, Lyft, and the Anti-Uber Alliance How WeWork Is Taking Over the World

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April 2016

Contents

COVER STORY

The ABCs of Alphabet Details about the newly formed company of companies (formerly known as Google) remain murky, but there’s a lot we can learn from the ways in which it resembles Microsoft, Nike, GE, and more. Begins on page 60

Courtesy of Google

Lofty goals Extending wireless Internet service to places cell towers can’t reach is among Alphabet’s many world-changing plans. (page 60)

On the cover: Photograph by David Black

April 2016 FastCompany.com 3

Contents

Soul proprietor WeWork cofounder Rebekah Paltrow Neumann makes sure the company stays true to its mission. (page 92)

Styling: Christian Stroble; hair: Tomo Jidai at Streeters London; makeup: Regine Thorre; production: LOLA Production NYC

FEATURES

Ly f t ’s f r i e n d s w i t h b e n e f i t s 86 By forming alliances with the likes

of Starbucks and GM, the No. 2 ridesharing company is creating a path forward in its race against Uber. By Rick Tetzeli

W e W o r k ’s g o l d e n t o u c h 92 Can 50,000 members—and a multi-

billion dollar valuation—turn WeWork into a household name? By Sarah Kessler

4 FastCompany.com April 2016

Photograph by Steven Klein

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Contents

FEATURES

People Changing Food

Failure is not on the menu “It has to work. I just can’t understand any other scenario. But it’s a hard way of running a company,” Chang says. (page 70)

70 As his Momofuku empire expands

to new platforms, David Chang stays focused on the umami-rich details. By Rob Brunner 78 Celebrity chefs Roy Choi and Daniel Patterson are serving up a different kind of fast food. 80 A fourth-generation Oregon rancher found a way to revive her family’s land—no chemical fertilizers required. 82 Danny Meyer, CEO of Union Square Hospitality Group, is eliminating tipping in his fine-dining restaurants. 84 More foodies who matter, including a pair turning crickets into baked goods and a chef using creative recipes to combat diet-related diseases.

DEPARTMENTS

12 From the Editor

Most Innovative Companies 14 The latest from McDonald’s, ESPN,

SpaceX, and more.

Most Creative People 18 Yancey Strickler wants to hold Kickstarter to a higher standard.

The Recommender 20 From jelly shoes to a sleek coffee-

maker, what we’re loving right now.

My Two Cents 108 Why choosing a job can also mean choosing a life. Set design: Alex Brannian

By Jon Birger

8 FastCompany.com April 2016

Photograph by Herring & Herring

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Contents

What’s measured is what matters

Skin deep 48 Gregg Renfrew is taking toxins out of beauty products—and lobbying the government to follow suit.

25 Nielsen’s quest to solve the TV

Pedal pushers

ratings conundrum raises as many questions as it answers.

52 Biomega’s high-design e-bike

targets urbanists with style.

The brand builder

The talents of ReverbNation

32 Alessandra Ghini helped shape

54 Data from 4 million musicians

Apple and Starbucks by targeting consumers’ emotions.

is informing new understanding, opportunities, and connections.

Surprising work tips

Crossing over

34 What Pulitzer winner Charles

58 Religion scholar turned television host Reza Aslan on making the jump to Hollywood.

Duhigg learned from studying the habits of the highly productive.

Power to the patients 36 Kaiser Permanente’s redesigned medical offices prioritize both comfort and efficiency.

Bright lights, Broad Cit y 42 The creators of the hit Comedy

Central show on provoking the right reaction.

Five takes on virtual realit y

Hair: Marcel Dagenais; makeup: Sarah Egan

46 These creative VR pioneers are worth watching.

Dynamic duo “We are five steps more absurd and five steps more grounded and real,” says Broad City’s Ilana Glazer (right, with cocreator Abbi Jacobson) of season 3. (page 42) 10 FastCompany.com April 2016

Photograph by Ben Rayner

From the Editor

When it comes to world-changing ideas in business, vision must be married to practicality.

If you believe in fate, there are signs that ride-sharing company Lyft has destiny on its side in its competition with Uber. After all, before Lyft’s two founders ever met, one of them had launched a company called Zimride; the other founder happened to be named Zimmer. They have become best friends, with weddings and children’s births coinciding with key moments in the company’s history. Serendipity seems to arrive at opportune moments. But luck is not a business strategy, and fortunately for Lyft, neither of its founders is waiting for the world to come to them. Instead, as editor-at-large Rick Tetzeli reports in “The Race Is On,” beginning on page 86, Lyft has maintained its relevance in an Uber-obsessed culture by focusing on the details it can control. What animates the company is a breathtaking idea: that ride sharing can radically change our transportation system, climate-change footprint, and even the way people interact. But what dictates its actions—including a slew of new partnerships with the likes of Starbucks and GM—is actually pragmatism.

Better together WeWork has attracted more than 50,000 members to its vision of communal work spaces.

Robert Safian editor@fastcompany.com

12 FastCompany.com April 2016

Celine Grouard (Safian, WeWork)

That twist of magic

Bold ideas get tossed around a lot (particularly during a presidential election season), but turning them into reality requires more than mystical sleight of hand. This month’s cover story about CEO Larry Page’s reconfiguring of Google into Alphabet is a prime example. Page has taken one of the most successful enterprises of all time and radically restructured it. As we explain in “Search for the Future,” beginning on page 60, Alphabet faces some devilishly complicated challenges, in part because it seeks to provoke Olympian change—in communications, health care, and more. To understand Page’s solution, we’ve broken it down into pieces, using as analogies the challenges faced (and posed) by companies from Apple to Nike. What this analysis reveals is how inspired and targeted Alphabet’s new structure is. It’s hard to overstate how difficult it is for any leader or organization to defy conventional thinking and instead give rope to a truly creative idea. And yet that’s exactly what is required to generate world-changing impact. Members’ cultlike enthusiasm for WeWork took real estate and workplace experts by surprise (see “Members Only,” page 92). Unconventional restaurants are remaking expectations around what and how we eat (see “People Changing Food,” page 70). Sometimes success requires more than one leap of faith. Google had made plenty of jumps (buying YouTube, launching Android) before Alphabet came along. Lyft, too, has had to exercise continued creativity, particularly as rival Uber built a seemingly insurmountable lead in customers, funding, brand recognition, and more. What Lyft has done, though, is find areas where it has its own advantages and aggressively leaned into those opportunities. That is no guarantee that Lyft will ultimately succeed. But by taking its own shot, defining success in its own distinctive way, Lyft at least has a chance to participate in and advance that breakthrough idea at the heart of its enterprise. It’s one more vote of confidence for the road less traveled.

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Most Innovative Companies Updates from the alumni

BAIDU

ESPN Milestones For the 2016 Winter X Games, ESPN partnered with Intel to install its Curie sensors in contenders’ snowboards, enabling the sports network to display real-time data like acceleration, altitude, and rotation during events. Challenges ESPN, which accounts for 32% of parent company Disney’s revenue, has lost 7 million cable subscribers within the past two years.

The golden ticket? McDonald’s hopes new menu items like breakfast bowls will continue to attract visitors.

Milestones While Google and the auto industry are focused on driverless cars, Baidu recently announced plans to put AI–equipped buses on the road by 2018. If early tests go well, the Chinese tech company expects to mass-produce the buses by 2020. Challenges Tens of thousands of Chinese users are boycotting the company following allegations that Baidu-run illness-support forums have become hubs for companies looking to advertise dicey medical services and clinics. Buzz

S PA C E X

Buzz The International Space Station

E M I R AT E S A I R L I N E S

MCDONALD’S What does a fast-food juggernaut do when customers no longer seem to be lovin’ it? It listens to what they really want—which, as it turns out, is hash browns and hotcakes. Since launching an all-day breakfast menu at 15,000 of its 36,000 locations last October, Mickey D’s is the most profitable it’s been in three years, revealing a 6% jump in U.S. sales in Q4 2015. The brighter outlook comes just one year after the burger chain brought in CEO Steve Easterbrook to restore the Golden Arches to relevance amid consumers’ increasingly selective eating habits. But McDonald’s isn’t resting on breakfast. To help sustain the 14 FastCompany.com April 2016

Milestones After resolving a handful of food-safety scan dals in China, McDonald’s is opening 150 of its “Create Your Taste” custom-burger locations in the region in 2016 after much success in the United States. Challenges While sales are up, store traffic continues to decline with the number of McDonald’s visitors dropping by 3% in 2015. Buzz

“What our customers are expecting from us today versus 15 years ago is changing.” Matt Biespiel Senior director of global brand development, McDonald’s

“We ask the Big 3 to step up and start competing on the fundamentals— product and service.” Sir Tim Clark President of Emirates Airlines, in Arabian Business op-ed

Milestones Starting in March, the Dubai-based, government-owned Emirates—recently ranked the world’s most valuable airline—will operate direct flights to Panama, which officials say will boost trade relations between countries in the Middle East and Central America. At 17.5 hours, the flight will be the world’s longest.

Milestones NASA renewed its commercial resupply contract with SpaceX, ensuring that Elon Musk’s orbital-transport venture will continue to deliver provisions to the International Space Station through 2024.

Challenges Amid growing concern surrounding the Zika virus, Emirates is offering refunds to ticket holders traveling to Latin America through April. Additionally, rivals in both the U.S. and Europe are pressuring regulators to cut subsidies to Persian Gulf carriers, claiming that they are monopolizing international travel.

Challenges Less than a month after achieving a vertical rocket landing, SpaceX failed to land its Falcon 9 rocket on a barge during a January test, resulting in a widely covered explosion. Meanwhile, Jeff Bezos–owned Blue Origin is proving to be a worthy competitor.

Buzz

Zhang Peng/LightRocket via Getty Images (McDonald’s); Joel Marklund/Bildbyran via ZUMA Wire (McMorris); NASA (ISS)

A breakfast boost

growth, it’s become focused on improving customer experience, experimenting with tech-infused store concepts and unveiling new eco-friendly packaging that sports bold and colorful lettering in an ongoing effort to catch up to more savvy competitors. Can McDonald’s ﬁnally attract a new generation of noshers? Or will two-for-$2 value meals lose their appeal?

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Most Innovative Companies

FAST RETAILING CO. Fast Retailing Co., the Japan-based parent of basics clothing brand Uniqlo, is one of the largest fashion companies in the world. Still, Uniqlo’s grand ambitions to conquer the United States—in 2012, it hoped to open up to 30 stores per year— have stalled, the second time the company has tried and struggled to win over Americans. In fact, while rivals Zara and H&M have thrived in the U.S., Fast

"We aim to make Uniqlo essential to every American life.” Justin Kerr Chief merchandising officer, Uniqlo U.S.

Milestones In February, Uniqlo brought a popular collection of clothing designed for Muslim women stateside. Challenges Fast Retailing Co.'s international unit, which includes its U.S. stores, reported a 14.2% drop in operating profit. Buzz

G I LT G R O U P E

“Gilt “ is cool. It’s got a real millennial following. Together we’ll create this power couple.” Jonathan Greller President of Hudson's Bay Co. Off-Price

Artist Ai Weiwei uses Legos for portraits of other political dissidents.

LEGO Milestones Facing public outcry after it refused to sell Legos to Chinese artist and dissident Ai Weiwei, the world’s largest toy maker announced that it will no longer require buyers to disclose why they’re purchasing its bricks in bulk. In the past, the company actively tried to curtail political uses of Legos. Challenges German regulators levied a $145,000 fine against Lego after an investigation found that the company threatened to stop selling to toy stores that attempted to mark down its products in 2012 and 2013. Buzz

ZYNGA Milestones In partnership with the online ad firm Rubicon Project, Zynga recently announced plans to develop political native ads that will allow 2016 presidential candidates to target voters within mobile games like FarmVille and Words With Friends.

A good fit Could collabs, like this one with Lemaire, help turn the tide?

Challenges The gaming company reported a $47 million loss in Q4 and continues to hemorrhage daily active users, reporting a 24% year-over-year decline in players. Buzz

16 FastCompany.com April 2016

Milestones In January, flash-sale startup Gilt Groupe was acquired by Hudson’s Bay Co., the owner of high-end retailer Saks Fifth Avenue. Gilt will be combined with Saks Off 5th, a discount spin-off, to further boost Hudson’s e-commerce offerings. Challenges Once valued at more than $1 billion, Gilt Groupe was sold for just $250 million in cash—less than the total amount of venture capital it raised. Buzz

L I V E N AT I O N Milestones The concert giant will sell tickets for and produce Rihanna’s upcoming world tour in support of her longdelayed album, Anti. The global megastar will play 67 shows in North America and Europe through August. Challenges Live concert tracker Songkick is suing Live Nation (and its subsidiary, Ticketmaster) for allegedly monopolizing the ticket-sales market. Buzz

Bob Chamberlin/Los Angeles Times/Polaris (Ai Weiwei exhibit); Jeff Kravitz/Getty Images for HBO (Rihanna)

Unique fashion, low sales

Retailing has opened just 45 Uniqlo American outposts and earlier this year lowered its earning predictions 10% after an unseasonably warm winter. (Uniqlo typically generates millions annually from its innovative line of heat-retaining textiles.) To stanch the loss, the retailer plans to push up the release of its spring clothing line. It won’t matter if Fast Retailing stocks Uniqlo stores with new clothing, though, if it can’t get more customers in stores to buy it. To that end, Uniqlo is opening ﬂagships in urban centers—like Chicago and Denver—and recruiting managers from its Asian stores, which are thriving. In the meantime, the brand might have to accept that becoming a household name in the U.S. will be a much more long-term endeavor.

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Most Creative People

Kickstarting a pro-social trend YANCEY STRICKLER Then HEAD OF COMMUNITY, KICKSTARTER Now CEO, KICKSTARTER

Yancey Strickler has always wanted Kickstarter to make a positive difference. But last fall, he took the crowdsourcing company’s do-good values a step further, reincorporating the business as a public-benefit corporation—a legal designation that lets shareholders know the company has broader goals than just making money. “That’s the punk-rock way to go: Just go all the way,” says Strickler, a former music journalist. With 32 states now offering PBC incorporation and companies such as Etsy and Warby Parker making the move, the CEO believes the startup world is beginning to embrace the public-benefit concept. “I’m an eternal optimist,” he says. “I believe it can get there.” As part of the transition from “Inc.” to “PBC,” the seven-year-old company has established a new charter that outlines rigorous ethical standards. For example, Kickstarter will not take advantage of tax loopholes, and at the end of each fiscal year, it will donate 5% of posttax profit toward arts-education programs and organizations fighting inequality. The company will also report executive-to-employee pay ratios. “We know there’s a lot to be figured out, and there are things we will have gotten wrong,” says Strickler, whose company has enabled creators to raise more than $2.2 billion for Kickstarter projects. “This means we’ll be held to a higher standard than other companies. That will create difficult days, but I have no doubt that ultimately it leads to a better organization.” —Nikita Richardson 18 FastCompany.com April 2016

HOW HE STAYS PRODUCTIVE S O M E T H I N G H E ’S E XC I T E D A B O U T The video for Kendrick Lamar’s “Alright.” “It’s so good. There are a lot of layers of emotions.” S O M E T H I N G H E I S N ’ T Voice-recognition technology. “As someone who loves conversation and other human beings, I just hate it. It feels like another little death for humanity and another outsourcing of our brain.” W H O W O U L D B E O N H I S L I S T O F M O S T C R E AT I V E P E O P L E Kanye West. “He’s always seeking new ways of expression. There’s a very sincere curiosity to him.” H I S FAVO R I T E K I C KSTA RT E R P R OJ E CT AT T H E M O M E N T Anomalisa. “It’s a stop-motion-animation film made by Charlie Kaufman. Fans stepped up to fund this crazy script he had that’s about existential dread, with puppets. He is a legitimate creative hero.”

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The audience puzzle As the television landscape fractures, figuring out who is watching what has never been more difficult— or important. BY NICOLE LAPORTE Photographs by Mauricio Alejo

When the CBS television series Limitless premiered on a Tuesday night last September, 9.9 million people tuned in to check it out. In today’s TV world, which is nothing if not limitless—given the deluge of programming on everything from Netﬂix to cable to YouTube and myriad ways to consume it— 10 million pairs of eyeballs for a new show is impressive. And that was only the beginning. After factoring in about a month’s worth of DVR playback and videoon-demand viewing following the show’s premiere, plus streaming data from CBS’s website and app, the network’s total Limitless audience estimate jumped to 16 million. “That’s a big difference,” says David Poltrack, chief research ofﬁcer for CBS. “That’s the new way that television programs become successful. They don’t become successful just

N E X T

April 2016 FastCompany.com 2 5

“Every Tuesday you get a rating for what happened on Monday night—one that only represents 60% of the total audience.” the digital chaos since at least 2007. That’s when Nielsen introduced the so-called C3 metric to factor in the ascendance of DVRs; it calculates the average viewership of ads during a show within three days of airing. Five years later, advertisers and agencies started embracing 26 FastCompany.com April 2016

Nielsen’s C7 rating, targeting a week’s worth of views. But both figures are quickly becoming less relevant, as people watch shows weeks, even months, after they air. What’s more, Nielsen’s metrics have traditionally not looked at which programs are being watched over subscription streaming services, such as Netflix and Amazon. Since these platforms are commercial-free, they have no incentive to provide ratings— leaving a black hole of information on who is binge-watching Transparent or old episodes of Parenthood (data that’s useful to content producers, if not advertisers). Nielsen’s success with total audience measurement would be nothing short of a reinvention for the company, which has become a punching bag for media executives who carp that its ratings systems are antiquated. “The idea that every Tuesday you get a rating for what happened on Monday night—one that only represents 60% of what the total audience is going to end up being—is a frustration for us,” says CBS’s Poltrack. Linda Yaccarino, head of ad sales for NBCUniversal, went on a diatribe against Nielsen at the Consumer Electronics Show in January, dismissing the C3 rating as “practically useless.” These sorts of complaints— which Nielsen doesn’t necessarily disagree with—are what spurred the company to action six years ago, when total audience first went into development. Nielsen, after all, is a nearly $17 billion company, with ratings accounting for a significant part of its revenue. Steve Hasker, Nielsen’s COO, calls total audience “the biggest product development project that Nielsen has ever undertaken.” Scores of engineers have been brought on to build plug-ins for the multitude of devices that Nielsen is now tracking and to create a software developer kit for media companies to install in their apps and online video players. So what’s included? Nielsen says it can now measure all TV and digital platforms—Netflix, Yahoo, and YouTube among them. (Its

1971

R AT ING S HIGH S A ND LO W S A look at Nielsen’s six decades of audience tracking

1950 The A.C. Nielsen company buys Hooper’s national radio-andTV-ratings service and begins measuring TV audiences. Texaco Star Theatre, hosted by Milton Berle, is the most-watched series of the 1950–1951 season and one of TV’s first hit shows.

1953

Newly armed with both total number of viewers and audience demographics for its shows, CBS cancels popular programs including Beverly Hillbillies, Green Acres, and Hee Haw in an effort to attract younger, urban viewers—a move that comes to be known as “the rural purge.”

1983 The final episode of MASH draws 105.9 million viewers, making it the most-watched series finale in television history. The runner-up: Cheers in 1993 with 93.9 million.

1994 Seventeen million people watch Olympic ice-skating silver medalist (and knee-clubbing survivor) Nancy Kerrigan host Saturday Night Live. The episode remains the show’s highest rated—and most awkward, some say.

2009 Forty-four million viewers (or 72% of all TV-owning households in the U.S.) tune in to watch Lucy Ricardo give birth to Little Ricky on CBS’s I Love Lucy. The episode drew 15 million more viewers than the previous day’s big television event: President Eisenhower’s inauguration.

TV viewing hits its highest levels ever as households watch for nearly nine hours per day.

2012

1966 The first season of Star Trek attracts a dedicated fan base but low ratings. NBC nearly cancels the series after season 2, but the torrent of fan letters it receives convinces the network to keep it on air for another season. The Star Trek franchise has since earned more than $1 billion for its films alone.

1970 The 42nd Academy Awards show earns the highest market share of any television broadcast: 78% of U.S. households watch as Midnight Cowboy becomes the first X-rated film to win best picture.

Good Morning America snaps the Today show’s 852-week winning streak. The triumph came in the midst of Today’s tensionfilled Ann Curry era and on a week that anchor Matt Lauer was away.

2015 Katy Perry’s Super Bowl performance draws 118.5 million viewers, making it the mostwatched halftime show ever. But even more viewers tuned in for the final 40 minutes of the game, when the New England Patriots came from behind to beat the Seattle Seahawks.

Everett Collection (I Love Lucy, Star Trek, Green Acres); Lou Rocco/ABC (Good Morning America)

on network viewing, on live TV. They don’t become successful just on the Internet. It’s an accumulation of this different distribution. You need to measure everything.” It sounds so simple. Just add up all the numbers, right? Hardly. The new math of TV ratings and audience measurement has never been more complicated. As online video platforms proliferate—and audiences scatter across smartphones, tablets, laptops, and connected-TV devices, such as Apple TV and Roku—getting an accurate read on viewership has become a Sisyphean task. There is no single, authoritative provider of data; networks have to cobble together sometimes contradictory information from an array of sources. What’s at stake: Without a full picture of a show’s audience, neither producers nor advertisers know the true value of what they’re selling and buying. Nielsen, the ratings stalwart whose weekly reports have been deciding the life or death of TV shows for six decades, wants to ride to the digital rescue with a new “total audience measurement” that promises to account for viewing across all platforms. This effort, which has been rolling out for the past few months, may seem improbable considering the company has been claiming it could tame

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work-around for the tight-lipped Netﬂix: track the audio ﬁngerprints of some 6,000 individual episodes.) It can parse numbers for a show into metrics that are comparable across platforms, from views to total time spent on a program to average audience size. It can also break down the numbers by device.

“Studios that sell to Netflix will be able to say, ‘What’s driving your subscribers are my shows, not yours.’ ” And thanks to a partnership with Facebook, it can deliver age and gender demographics for online video viewers, by correlating them with Facebook’s anonymized useridentiﬁcation database of 157 million people in the U.S. alone. Many in the television industry are rooting for Nielsen to succeed, particularly if its results counter the bleak refrain that TV ratings are on a downward spiral. It would, says Hasker, “explain to advertisers, to agencies, and to Wall Street that the viewership for my programming has gone up, not down.” It also creates an opportunity for networks to monetize all those “extra” digital views that haven’t been counted. The $70 billion advertising question is how marketers will respond once Nielsen’s numbers ﬁnally place television and digital audiences side by side and in a comparable format. Nielsen’s traditional metrics track the average audience size per minute of a show, while online video metrics have revolved around views. For a sense of the distortion this creates, recall the chest-thumping by Yahoo back in October, when it reported there were 33.6 million streams of an NFL game between the Buffalo Bills and the Jacksonville Jaguars. But only half that number were unique 28 FastCompany.com April 2016

viewers, and once you spread them across an entire game, well, in TV terms, you end up with an audience of just 2.4 million. Whether or not a perfect solution emerges, Nielsen’s new total audience measure seems most likely to succeed . . . in fanning the debate. “When marketers think about marketing, they’re not thinking about TV versus online versus whatever,” says Brad Smallwood, VP of measurement and insights at Facebook, which last fall introduced an ad-buying product that provides Nielsen ratings for digital ads. “They just want to know how many people saw [their ad].” Not all marketers agree. “To some degree, the normalizing of ratings across platforms makes sense, because it helps advertisers compare apples to apples,” says Bre Rossetti, VP, director of strategy and innovation at Havas Media. “But it can also be dangerous.” Rossetti argues that marketers instead need to start “trading in attention,” or how intently people engage with their content. One benefit of Nielsen’s effort is that it could give television studios added muscle in negotiations with streaming services. “My theory,” says one veteran TV executive, “is that Netflix is driven by broadcast and cable shows” more than original content. While Netflix itself has data that answers that question, it hasn’t opened itself to outside measurement. (Though Netflix would not comment for this story, CEO Reed Hastings recently told investors: “Our titles are watched on the go and at home on a wide range of devices, making measurement of the viewing of any given title difficult for third parties.”) But if Nielsen’s data does align with this exec’s theory, he contends, “Studios that sell to Netflix will be able to say, ‘Hey, wait a second here. What’s driving your subscribers are my shows, not yours. Your shows are the perception of what you are, but my shows are the reality.’ ” That means the balance of power in this new world order could be disrupted—by one of the ultimate symbols of the old one.

V IE W ING H A B I T S A closer look at how we watch television today

Using its new total audience measurement tool, Nielsen broke down six ways people consumed a single episode of a network drama after it aired last September. It tracked viewers who watched live, as well as those who used DVRs, video-on-demand services, connected TVs, and computers and mobile devices in the 35 days that followed. Across all demographics, 45% of viewers caught the show live (see chart, below). But when you look at different age groups, that figure varies dramatically, with 15% of 25- to 34-year-olds watching the show as it aired versus 64% of the 50-plus audience set. Surprisingly, the youngest viewers (18 to 24) were more likely to watch the episode live than digitally or via connected TV or VOD. Digital does have a hold on one age group: 18% of people ages 25 to 34 watched on a computer or mobile device. They were the only age group with more digital than live viewers—for now. Total viewership of a single TV episode from September 2015:

Live 45%

VOD 7% (1 to 35 days) Digital 8% (1 to 35 days)

Connected TV 6% (1 to 35 days) DVR 32% (1 to 7 days after airing)

DVR 2% (8 to 35 days)

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Master Class

The brand builder

Ta p i n s i d e r e s o u r c e s Part of Ghini’s brand strategy for Starbucks included revamping the mermaidcentric logo. Before hiring an outside agency, she asked designers at the company to take a first pass. After weeks of experimentation, two young employees presented a logo that’s almost identical to the current trademark. Seeing their work was “a wow moment,” Ghini says. “I thought, Of course, release the siren. Let her be a beacon for bringing people together.”

Alessandra Ghini helped Apple and Starbucks stir consumers’ emotions—and win big. BY MARK WILSON Photograph by Justin Kaneps

Use your limitations

Lessons learned Ghini says marketers should see a product as a story, not a list of features.

In 2002, Ghini was tasked with marketing Apple’s Final Cut Pro software— without using familiar resources such as fliers and brochures. So her team created videos that demonstrated use cases of the programs, landing on a crowdsourcing strategy that is still used in ads (and Apple Stores) today. “Eventually, we were able to stop telling customers to believe us and instead start showing what artists and filmmakers were using it to create,” she says.

Go for the heartstrings

When a music ad inspires your sense of adventure or a barista asks how you’ve been, you’re likely experiencing the type of interaction designed by Alessandra Ghini. A 20-year marketing veteran, Ghini joined Apple in 2001 and helped craft the iPod’s debut, then spent nearly a year constructing a new brand strategy for Starbucks. After eight years consulting for companies including Vans and Adobe, she recently became chief marketing officer of hightech tea startup Teforia. Here’s her blueprint for telling a brand’s narrative. 32 FastCompany.com April 2016

Be nimble At Starbucks, CEO Howard Schultz and Ghini wanted to emphasize “moments of connection,” like when a barista knows your name. To create that connection around cake pops or scones, food had to be its own attraction. Schultz and his executives decided to separate the food and drink divisions—a change that started to take effect just 30 days later. Ghini’s takeaway: Agility starts with alignment at the top.

Despite its popularity, the iPod’s “1,000 songs in your pocket” tagline failed to take the product mainstream. Ghini’s team found the problem: Storage space wasn’t the point. “We realized machines were more than just a tool,” Ghini says. “Why do you enjoy the iPod? [Music] brings up so much emotion.” Apple worked with an external agency to produce a nowubiquitous campaign that brought new verve to the iPod with colorful, expressive human silhouettes. “It shows the joyful way music releases your true self,” Ghini says. “We took their creative and ran with it.”

Stuck in trafﬁc. Ideas

still moving for ward.

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Productivity

Surprising work tips How SNL, Frozen, and poker can help you get more done BY STEPHANIE VOZZA Illustration by Karolin Schnoor

Charles Duhigg thought he was on top of things. The New York Times reporter won a Pulitzer Prize in 2013, and his first book, The Power of Habit, was a best seller. But looking at some contemporaries, Duhigg realized he wasn’t doing as much as he could. New Yorker writer Atul Gawande, for example, is also a surgeon, medical researcher, and author of four books. “I felt like I was playing in the kiddie pool,” says Duhigg, “while Atul was swimming in an Olympic.” He decided to find out how some people tackle so much. The result is Smarter Faster Better: The Secrets of Being Productive in Life and Business. Here are five things Duhigg found that could expand your view of what you can do.

Look at Saturday Night Live

Be willing to “ L e t I t G o”

The best collaborative communities cultivate what Duhigg calls “psychological safety”: a sense that teammates can trust one another and have honest discussions. Smarter Faster Better looks at the example of SNL, which developed a culture where people felt secure enough to create. Teams that use this approach become more productive, Duhigg says, as members share ideas and feel empowered to take risks.

Highly productive people constantly hone their approach. “They don’t find one system and stick to it,” says Duhigg. “They think about productivity all of the time and frequently change their methods.” In his book, Duhigg writes about how Disney executives decided to rethink Frozen midstream, ditching the typical fairytale story line and reinventing the characters. The ensuing anxiety fueled

34 FastCompany.com April 2016

creativity, resulting in a movie that became the topgrossing animated film of all time.

Stretch yourself Just because something seems impossible doesn’t mean it is, and the more ambitious you are, the more you’ll do. Duhigg calls this setting “stretch goals.” “A stretch goal is a huge ambition,” he says. “It inspires our motivation and dreams. But it can create panic.” To avoid that, Duhigg suggests breaking

them down into shorterterm goals that will seem more achievable.

Think like a Marine How can you get excited about a project? Duhigg points to the U.S. Marine Corps’s discovery that the most engaged troops are those who feel they have influence over their own lives. As a result, the USMC redesigned its boot camp to offer more options and assigned tasks without instructions for completing them.

Bet on the future Duhigg writes about poker champion Annie Duke, who, when placing a bet, weighs the probability of each outcome and acknowledges what she doesn’t know. If she bets wrong, it’s experience from which to draw later. “Most of us are trained to think of the future as one right answer,” says Duhigg. “Force yourself to think about contradictory possibilities: what is more likely and why. You’ll make much better decisions.”

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World-Changing Idea

What the doctor ordered Kaiser Permanente’s Bernard Tyson has a vision for the future of American health care. BY ADAM BLUESTEIN Photograph by Nicholas Albrecht

The ﬁrst thing you notice when you step into the exam room at Kaiser Permanente’s new health center in Manhattan Beach, California, is the roomy leather exam chair. Instead of forcing patients to perch awkwardly—as a standard, papercovered table does—it allows them to sit eye-to-eye with their doctor, who can summon x-rays, lab results, and even real-time specialist consultations on a wall-mounted touch screen, or send prescriptions to an on-site pharmacy via a tablet. Sitting smack in the center of the room, the chair ensures that everything literally revolves around the patient. That’s exactly the point. According to Kaiser chairman and CEO Bernard J. Tyson, the question driving the redesign of the exam room

A good prognosis “It’s all of our responsibility to make health care affordable,” says Kaiser Permanente CEO Bernard Tyson. “We’re getting results, but I’m excited about doing even better.”

36 FastCompany.com April 2016

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was: “How do we create a holistic experience where this organization is showing you care, compassion, and respect—and giving you all the medical information that you need?” The exam room is part of Kaiser’s championing of a new humancentered, design-driven approach to medicine—and its vision for the future of health care delivery. The Oakland, California–based notfor-proﬁt, which provides both insurance and health care services through its own network of doctors and hospitals to 10.3 million members across eight states and Washington, D.C., is rolling out 10 new medical ofﬁces, called “health hubs,” throughout Southern California over the next 18 months. Though Kaiser has long been recognized for successfully delivering affordable, high-quality care—it brought in approximately $60 billion in operating revenue in 2015—it’s facing growing demand for services, along with increasing

World-Changing Idea

T HE M A K ING OF A MODERN CLINIC Inside Kaiser Permanente’s plans for its new health hubs Though specific finishes will be customized to reflect each location, Kaiser Permanente’s medical buildings will share many of the same elements. (1) Inspired by Apple’s Genius Bars, the Thrive Bar will be staffed with experts offering free advice on issues like exercise and nutrition. 1

(2) Members can check in with a receptionist or use a kiosk. Several hubs will also have self-

“How do we create an experience showing you care, compassion, and respect—and giving you all the medical information you need?”

serve vitals stations to measure blood pressure and heart rate.

(3)

38 FastCompany.com April 2016

(4) Every exam room contains both a large, wall-mounted display and the provider’s tablet.

(5) The exam chair takes up less room than a table. Kaiser is working with manufacturers on a next-gen model that will be more luxurious, less clinical.

Courtesy of Kaiser Permanente

competition from both big players and startups. The health hubs represent a total overhaul of the patient experience, from the checkin process to the aesthetics of the waiting area to the way doctors and nurses interact with members and one another. Tyson describes the first ofﬁces as pilots. He considers them real-world laboratories to test and

Public areas feature lounge-like seating and common tables, designed to foster interactions among patients.

World-Changing Idea

fine-tune the physical features and work flow. The hope is to eventually introduce aspects of the health hubs in Kaiser clinics across the country. Manhattan Beach is the first of these hubs—and with 12 exam rooms in 8,000 square feet, it’s also the smallest. The largest, set to open in L.A.’s Baldwin Hills–Crenshaw neighborhood in June 2017, will be more than 100,000 square feet and include everything from conference and event spaces to a garden with a two-mile walking path. The experience starts with the waiting rooms, which take their

“community rooms,” which span both indoor and outdoor space. “The culture of health care has been to get you in and out,” says Tyson. “We’re inviting you to linger. This is more than a physician visit; this is about your total health.” This emphasis on education and preventive care is essential to Kaiser’s unique structure. Since Kaiser providers receive a fixed amount of money per member, the system is engineered toward keeping patients healthy and out of the emergency rooms. Kaiser’s new spaces are also about keeping costs low: They are designed to be more efficient at serving patients. The first 10 hubs are projected to boost the number of face-to-face visits per exam room by between 20% and 40% and to deliver overall square-footage cost savings of 10%, thanks to spaceconscious floor plans, redesigned collaborative work flows, and investments in new technologies. Kaiser has a strong record of technological innovation. It was among the first big health systems to successfully implement electronic medical records, investing $4 billion to get its KP HealthConnect platform fully operational in 2010. In 2012, it launched a mobile app to give patients 24/7 access to their records, along with appointment scheduling and easy prescription refills. Kaiser doctors now conduct more than 20 million telehealth appointments with members annually and have access to an integrated, enterprise-wide platform that enables video consults. As telemedicine appointments increase, Tyson expects the new hubs to become even more productive. Just as important for Kaiser, the hubs will serve as physical anchors for a model of care that aims to move health services, as much as possible, out of hospitals and medical offices and into members’ communities and homes. This means ramping up telehealth and other virtual services but also rethinking Kaiser’s physical presence. Concept development is under way on an initiative called Blink, a network of

“The culture of health care has been to get you in and out. We’re inviting you to linger. This is more than a physician visit; this is about your total health.”

cues from retail and hospitality. At the Manhattan Beach outpost, the vibe is warm, West Coast modernism: There’s lots of wood, natural light, and inviting touches, such as a living wall of green plants. A pair of ATM–like kiosks near the front door allow members to check themselves in if they prefer not to wait for the tablet-wielding receptionist. They receive a text alert when the doctor is ready. In larger facilities, the reception area will be reimagined as a kind of public square, where patients can wander while they wait, getting free information on nutrition and exercise from staff at a counter called the Thrive Bar. They can also take part in yoga classes, cooking demos, and the other programming that Kaiser is incorporating into 40 FastCompany.com April 2016

T HE Y ’ V E GO T YOU COV ERED Kaiser isn’t the only one reimagining health care. Here are three startups with a new take on insurance.

Oscar Founded 2012 Serves New York, New Jersey, California, and Texas An early entrant in the insuranceexchange system created under the ACA, Oscar focuses on member benefits, including a rewards program that offers gift cards for regular exercise, and covers the total cost of preventive care. With Oscar’s mobile app, members can access medical records and set up appointments. So far, 125,000 people have joined, 65% of them under the age of 45.

Zoom+ Founded 2015 (ZoomCare founded 2006) Serves Washington and Oregon Known for its 34 low-cost health clinics throughout the Pacific Northwest, ZoomCare began offering insurance to patients in Oregon last year. The new Zoom+ membership offers access to clinics, along with free yoga and parenting classes and mental health services. Zoom+ now claims “several thousand” members.

Clover Health Founded 2014 Serves New Jersey While most insurance companies avoid high-risk patients, such as the elderly and the chronically ill, Clover Health works exclusively with people on Medicare. Using data generated by insurance claims, the company determines whether patients are keeping up with prescriptions and scheduling necessary tests. The goal? To help members stay on top of their medical needs.

small, urgent-care centers staffed by nurses. Kaiser is working on another program called Pivot, which will offer members more communitybased services to address issues such as drinking, smoking, and weight loss. Last December, Kaiser announced plans to open its own medical school in Southern California in 2019, which will train doctors in key aspects of its model: delivering care beyond traditional medical settings and addressing the specific needs of diverse communities. Tyson’s ambitious brand expansion comes at a time when many traditional insurers and providers are struggling to keep up with rising costs and the preventive-services requirements mandated by the Affordable Care Act (ACA). This has prompted aggressive moves by traditional competitors (see Anthem’s merger with Cigna, awaiting federal approval) and a flood of Silicon Valley investment into healthinsurance startups such as Oscar and Clover Health (see sidebar), with their promise to upend the industry. But Kaiser is the rare legacy organization that has figured out how to make American health care work. When it comes to clinical outcomes, its providers nationwide rank among the best in the country. In California (Kaiser’s biggest market, by far), its 2016 plan premiums are among the least expensive on the nation’s health-insurance exchange. Just as impressive: Kaiser rose to the challenges presented by the ACA and took on more than a million new members nationwide in 2014–2015 (with, yes, a slight increase in premiums, which raised some hackles). Tyson isn’t threatened by the new competition. In fact, he welcomes more conversation about how to reprioritize medicine around patients: “Most of the industry still has a hard time thinking about patients as also consumers,” he says. “We try to demonstrate the possibilities.” In doing so, Kaiser, the old-school behemoth, might prove to be the most relevant health care innovator of them all.

Illustration by Fabricio Rosa Marques

Creative Conversation

“We don’t always agree, but that would be crazy if we did” Broad City creators and stars Abbi Jacobson and Ilana Glazer talk about finding a common voice—and always pushing the limits. INTERVIEW BY KC IFEANYI Photographs by Ben Rayner

You two met as improv students at the Upright Citizens Brigade’s training center, created Broad City as a web series in 2006, and cranked out 34 episodes before the show was picked up by Comedy Central. Is anything lost when you transition from a personal project to something bigger? Ilana Glazer: We’re really lucky that Comedy Central shared our vision and nurtured our creativity. They never put our balls in a vise. I think other networks are catching on. Abbi Jacobson: Yeah, they’re realizing that they need to trust [content 42 FastCompany.com April 2016

creators] more or else [shows] get canceled. Stuff gets canceled constantly because [networks] are trying to ﬁt something into a box that they think [people] want, but it doesn’t work—nobody watches it. There are so many entertainers on YouTube trying to get an ounce of the fame you’ve both achieved. How were you able to get noticed? AJ: We took [the web series] so seriously. I didn’t know what to do after three or four years of day jobs and trying to do comedy at night. So when we started this, we both sort

of duct taped ourselves together. Like, “We’re doing it!” We latched onto it so hard. IG: No matter what, if you focus your energy on building momentum, you will be rewarded in anything: in a friendship, in a romantic relationship, in volunteer work— anything you do. That’s been the most maturing experience, seeing how time works: You put your time and energy into something and it comes out the other end. AJ: You can’t just be funny—you have to be strategic. IG: And if you are just funny and

Broad appeal Abbi Jacobson (left) and Ilana Glazer keep their hit Comedy Central show both surprising and consistent by acting as each otherâ&#x20AC;&#x2122;s eyes and ears.

Creative Conversation

other people are using you as this funny puppet, you end up being less funny. The quality of your work will truly decline if you’re not behind the wheel.

ILANA GLAZER H o m e tow n St. James, New York

Ed u c at io n New York University

I n d e p e n d e nt projects

30-SECOND BIOS

2015’s holiday film The Night Before, with Joseph Gordon-Levitt; the 2013 indie How to Follow Strangers

Th o u g ht s o n B r o a d Cit y s e a so n 3 “We are five steps more absurd and five steps more grounded and real.”

Be st ce l e b rit y impression Nicki Minaj (The Late Show With David Letterman, February 2015)

ABBI JACOBSON H o m e tow n Wayne, Pennsylvania

Ed u c at io n Maryland Institute College of Art

I n d e p e n d e nt projects The upcoming ensemble drama Human People, with Michael Cera and Tavi Gevinson; the comedy sequel Neighbors 2: Sorority Rising

Th o u g ht s o n B r o a d Cit y s e a so n 3 “In 1 and 2, we didn’t really have season arcs, and this year we do.”

Be st ce l e b rit y impression Drew Barrymore (season 2, episode 3)

44 FastCompany.com April 2016

Someone who’s helped you steer is Amy Poehler, a UCB cofounder who signed on as executive producer of the show when it moved to TV. What has she contributed? AJ: Amy is really good at encouraging us to make there be signiﬁcant moments—tender moments. I think that’s what she loves about the show. IG: She has such great taste. There was one episode that she said we should fully scrap, and she was right. We were using a plot device that was too early in the series to use: origin story. We wanted to do it in the ﬁrst season, and it was so painful because we loved that script. We didn’t think we were getting a second season—she knew better. Each Broad City episode follows a fairly traditional setup: an intro scene and three acts building the story. But you have introduced an “outro”—a fourth act—in which Abbi and Ilana process what’s just happened. This reinforces the real heart of the show: Abbi and Ilana’s friendship. How do you weigh that heart against all the absurdity? AJ: It’s a very delicate balance. IG: We found that in season 2, that act 4 of us just hanging, not necessarily recapping but checking in where we are now after the three acts of the story, was a useful tool. I like how chill those moments are. If the broads are nuts together, then the setting has to ground it—they’re being crazy within a very real, grounded setting. If the setting is nuts, then the broads are like, “What the fuck is going on?” So it’s about locating the absurdity or the grounded thing and balancing it out. How are you two feeling about the show now that it’s in season 3? AJ: This is like the Wednesday of the series. It’s like, we gotta get over it and then . . .

IG: . . . we’ll have more of a direction of what it’s going to be. There’s a long history of TV shows based in New York. Has that helped Broad City strike a chord? IG: It always makes me think of Sex and the City—[people] would be like, “New York is the fifth character.” But I feel like with Sex and the City, New York was more of this delicious backdrop, and it usually was beautiful and upper class. AJ: [That show was about] the riches of New York. And ours is finding the riches in the nonriches. IG: Yeah, it’s like finding the richness in the filth. AJ: Our show is about why you would move to New York, why people are so inspired by it. IG: With Sex and the City, those characters were using New York as their personal tool, and in Broad City we are drowning in the city and just trying to get some air and appreciate stuff along the way. The show is also about suburban-transplant love, when you’re like, “Oh, my God! Can you believe the piles of trash? I love it!” Continuing to be charmed by the muck—it’s very funny to me. You’ve built Broad City from the ground up as a duo. How do you solve creative differences without damaging your friendship? AJ: [The show is] kind of the voice— the in-between of our individual voices. We don’t always agree, but that would be crazy if we did. Someone not agreeing with someone’s pitch sometimes leads us to “What about this?” Sometimes in talking it out and disagreeing we find the actual thing. IG: And it’s not always like, “We met in the middle—love it, sister!” Sometimes it’s like we did that Abbi [idea], we did this Ilana one, and that full moment felt “Broad City” because we averaged out in the middle. It does vary, but it ends up being a pretty cohesive compromise between our visions. AJ: In the edit, we mostly agree on things. A lot of times, if one of us doesn’t like our own performance,

the other will be like, “I disagree.” Sometimes it’s hard to look at yourself from an unbiased point of view. IG: The more I watch myself, the harder it is to watch myself and the more I ﬁnd myself relying on your eyes. Your collective voice can turn out some amazingly bawdy comedy, which doesn’t always go down well with the PC police. How do you handle that criticism? AJ: It’s very tricky. It’s doing it in a way that isn’t offensive while you’re still commenting on the offensiveness of the world we live in.

“No matter what, if you focus your energy on building momentum, you will be rewarded,” Glazer says.

IG: We weren’t around before shit was PC, and I’m like, thank God, because I like this era. AJ: I can’t imagine having a TV show 10 years ago. In this era, if someone has a problem with something, they write about it online, and people talk about it. That’s kind of cool. IG: Right, it’s just a point of discussion. AJ: The “Is it okay?” conversation is an interesting one to have. IG: Feedback is so validating. I don’t care if they’re like, “Didn’t love this.” I’m like, I can’t even believe you’re pressing SEND and publishing this.

Hair: Marcel Dagenais; Makeup: Sarah Egan

Watch the whole story at

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Five Ways

Total immersion How virtual reality will reshape industries BY DANIEL TERDIMAN

Live events Though most VR content is prerecorded, live sports and entertainment broadcasts are on the way. NextVR has already tried it with the Golden State Warriors’ NBA opener last fall and the Daytona 500. Universal and iHeartRadio are partnering to live-stream a handful of concerts this year.

Illustration by Koyoox 2

Rea l e state With its proprietary cameras and app, Silicon Valley–based Matterport has helped real estate companies such as Redfin and Beverly Hills’ Altman Brothers create interactive 3-D models for thousands of listings, offering buyers an easy way to experience open houses. Hotels are also using Matterport’s technology for virtual room tours. 3

Fa sh ion New Zealand–based 8i is the pioneer of volumetric VR, which allows viewers to move freely throughout a scene, making it possible to see people—and what they’re wearing—from any direction. The company’s not discussing its partners yet but has been in talks with a number of major fashion players.

British startup Medical Realities created its Virtual Surgeon training tool to let novice doctors experience operations through the eyes of a surgeon. VR HealthNet is developing virtual-reality modules for nurses and other medical professionals aimed at helping them internalize certain procedures without any risk to patients.

It’s rare that a consumer technology is a giant leap forward rather than the next iterative step. Virtual reality represents just that kind of leap. With the spring launch of the Oculus Rift and HTC Vive, as well as the imminent release of Sony’s PlayStation VR, high-end virtual reality has arrived. Add to that lower-end headsets like Samsung’s Gear VR, Google’s Cardboard, and many other players and it’s clear that 2016 is the year the technology goes mainstream. While none of the hardware makers are promising to sell millions of units this year, estimates peg the VR market—hardware and content—at $30 billion by 2020. It’s not just gaming and entertainment that are poised for transformation. Here are some of the most interesting—and potentially lucrative—ways VR is being deployed. 46 FastCompany.com April 2016

Milita r y Designing simulations and training for the armed forces is a big business—as much as $9.3 billion globally, according to the military contractor CAE. Britain’s Plextek is developing VR training programs for battlefield medics, while Korea’s DoDAAM has created a paratrooper trainer for the Rift.

David Paul Morris/Bloomberg via Getty Images (woman); Timothy A. Clary/AFP/Getty Images (Martin); Getty Images (glove)

Medicine

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Pure energy Renfrew is harnessing Beautycounter’s network of home-based sales reps to advocate for legislative change.

A clean slate How Beautycounter founder Gregg Renfrew is ridding cosmetics of toxins BY LAUREN SCHWARTZBERG Photograph by Emily Berl

Gregg Renfrew, founder and CEO of the Santa Monica, California– based skin care company Beautycounter, set out for Washington, D.C., last fall on a mission to push for greater federal regulation of the ingredients used in cosmetics. As she spoke with senators and experts about the hidden dangers of beauty products and urged passage of a bill that would strengthen FDA oversight of the industry, Renfrew brought along some muscle: a dozen of Beautycounter’s consultants— home-based sellers who act as something akin to the Avon ladies of yore, introducing friends and neighbors to the company’s toxinfree products. According to Renfrew, their passion was invaluable. She recalls one meeting where a consultant jokingly warned Senator Lindsey Graham that South Carolina would feel like a very lonely place if 48 FastCompany.com April 2016

Passion Project

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his constituents were to ﬁnd out he wasn’t voting for health-protective laws. Renfrew’s base was ignited. For Beautycounter employees and consultants, selling products is as important as delivering the message of safe cosmetics. Renfrew was inspired to found the company after discovering that she could rid her house of the toxic chemicals hiding in everything from cleaning products to mattresses—but doing it for her shampoos, moisturizers, and makeup was nearly impossible. The certiﬁed B Corporation launched in 2013 with a commitment to bringing transparency to the murky world of personal care. It began with a handful of toxin-free moisturizers and exfoliants and now sells makeup, hair care, and baby products; in August, Beautycounter will introduce a teen skin care line. The company, which sold 500,000 products in 2014, moved 2 million products last year and expects to sell between 5 million and 6 million by the end of 2016. Beautycounter’s impressive growth has been driven by a multipronged retail strategy that includes its own website, an expanding set of partners such as J.Crew and Goop, and (starting this summer) pop-up shops. But the engine of the company remains its network of more than 16,000 at-home salespeople, who account for 35% of its sales and whose activism has become Beautycounter’s crucial marketing strategy. According to a source close to the company, Beautycounter hopes to reach $150 million in sales this year—just three years after opening—without spending a penny on traditional advertising. “Our consultants are educators,” says Renfrew. “Yes, they’re selling a product, but they’re also serving the larger solution of getting safe products into the hands of everyone by talking to as many people as they can.” The organic beauty sector has expanded dramatically from a decade ago, when pioneers such as Janet Nudelman, director of the Campaign for Safe Cosmetics, started calling for regulation. Natural 50 FastCompany.com April 2016

Passion Project

CLOSER LOOK Beautycounter’s allnatural solutions to some of the cosmetics industry’s toxic challenges

Lip Sheer Typical lipsticks frequently have synthetic flavors made up of any combination of 3,000-plus chemical ingredients, some of which contain hormone disrupters and allergens. Beautycounter uses plant-based ingredients such as jojoba esters and real vanilla instead.

Tint Skin Foundation Most foundations use polyethylene glycol compounds, which thicken and emulsify, but sometimes contain 1,4-dioxane, a carcinogen. Instead, Beautycounter employs hyaluronic acid, a natural moisturizer that reduces the appearance of fine lines and wrinkles.

Color Outline Eye Pencil Cosmetics companies often use parabens, a type of preservative, to prevent bacteria growth on eyeliner pencils despite their link to hormonefunction disruption. Beautycounter uses rosemary extract, a natural antimicrobial.

products will account for an estimated $11 billion of the total $70 billion global personal care industry this year and are the fastest-growing segment of the industry in the U.S., according to a recent study by Packaged Facts. Corporations have taken note. Clorox purchased Burt’s Bees in 2007; Colgate-Palmolive acquired Tom’s of Maine; and brands small and large are introducing “safe” and “natural” products. But rare is the company that uses genuine activism to push product. With its consultants, Beautycounter has injected the classic door-to-door model with advocacy. Its consultants’ regular “socials” are as much mimosa-filled sales parties as they are calls to action, complete with letter-writing campaigns to local lawmakers, and their social media feeds announce both product sales and new research into the health threats posed by household products. When senators are back home from D.C., Lindsay Dahl, Beautycounter’s director of policy and partnerships, helps consultants schedule in-person meetings. The result is an extraordinarily loyal (and growing) consultant and customer base. “[We] train consultants to understand the facts of our broken system and mobilize that big network to raise our voices,” says Dahl. Renfrew has a history of making things happen. She sold her early Internet startup, the Wedding List, an online bridal registry, to Martha Stewart in 2001 and was CEO of Tommy Hilfiger’s children’s retail group Best & Co. Noting the absence of a system that verifies the safety of cosmetics, she saw another opportunity. “In some ways,” she says, “beauty is the last frontier.” She entered an industry that is “woefully underregulated” in the United States, according to Nneka Leiba, deputy director of research at the Environmental Working Group (EWG) and leader of its Skin Deep database, which assesses cosmetic safety. The FDA’s only guidelines for intervention come from a 1938 bill that has remained virtually unchanged. The agency has neither the

power to check ingredients before they go to market nor the ability to recall products that are believed to be harmful. The European Union has banned about 1,400 ingredients from cosmetics. In America, that number is 11. “It’s the Wild West,” says Nudelman. Using a guilty-until-proveninnocent approach to ingredients, Beautycounter has banned more than 1,500 from its own products; 80% of those it does use are organic. And it is uncompromising when it comes to performance. Beautycounter is about to unveil its ﬁrst mascara, after three years of development and ﬁnding work-arounds to common ingredients, such as parabens. That commitment, along with sleek, minimalist packaging and moderately aspirational prices (moisturizers run from $43 to $75), has attracted tree huggers and juicebar moms alike—many of whom become consultants, making between 25% and 35% of each of their sales. In May, 100 of Beautycounter’s consultants—two from each state— will join Renfrew and Dahl on a

“Our consultants are educators. Yes, they’re selling a product, but they’re also talking to as many people as they can.” return trip to the Capitol to support a new bipartisan bill that, if passed, could expand the FDA’s authority over the cosmetics industry. “Historically, the industry has fought regulation,” says Christine Hill, the EWG’s director of government affairs. “Now companies are starting to feel the pressure from consumers.” The next step is to convince the Senate. Renfrew is relying on her consultants: “They are the voice of change for us.” At the moment, they are the sound of success as well.

Wanted

Pedal pushers Two-wheel innovator Biomega has created a new bike with secret powers. BY DIANA BUDDS Photograph by Stephanie Gonot

52 FastCompany.com April 2016

For nearly 20 years, Denmark-based bicycle brand Biomega has worked to export Scandinavia’s alternative-transit culture to the wider world, in part by recruiting acclaimed designers such as Apple’s Marc Newson and Karim Rashid to make bikes that are just as covetable—and recognizable—as luxury automobiles. “If the bike industry wants to compete with cars,” says Biomega cofounder Jens Skibsted, “it

needs to be able to assert itself by creating brands.” The company’s latest product—an electric bike dubbed the OKO — was concocted by KiBiSi, a design powerhouse led by Skibsted, world-renowned architect Bjarke Ingels, and industrial designer Lars Holme Larsen. The high-end e-bike is geared toward commuters who are considering a switch from four wheels to two. Forged from carbon-fiber material, the OKO cleverly hides its machinery— battery, motor, wiring— within a seamless frame, making it look like a regular bike. The quiet, 350-watt motor helps you pedal, boosting your own efforts by as much as 20 miles an hour for up to 40 miles per charge. Skibsted hopes the OKO, which starts at $2,295, will be especially appealing to design-conscious urbanites. “Expressing lifestyle via the objects you surround yourself with is very much accepted in cities,” he says. “It’s important that there are objects for the self-aware urban dweller who cares about commuting in style and in comfort.”

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Behind the Brand

A new way to find the next pop star Online music hub ReverbNation is discovering talented artists by mixing big data with human curation. BY JOHN PAUL TITLOW Illustration by Harry Campbell

As an 11-year-old living in Ogden, Utah, Sammy Brue wasn’t expecting much when he uploaded some demos to ReverbNation, a site that helps unsigned musicians showcase their tunes on customized web pages, build an audience, and submit music to radio stations and record labels. But three years later, Brue’s career is taking off: The singer-songwriter has signed to prominent music-management company Red Light and is being courted by big labels—all directly due to ReverbNation’s new data-driven incubation program, Connect. When it launched in 2006, the site set out to be a social network and do-it-yourself

54 FastCompany.com April 2016

Behind the Brand

platform for musicians in the same vein as Myspace, helping artists steer their own careers. Now-famous musicians such as Alabama Shakes, Imagine Dragons, and Kacey Musgraves hosted music on the site early in their careers. Though many artists have since gravitated toward newer sites such as Bandcamp and SoundCloud to share their music, ReverbNation remains a big player, hosting pages for around 4 million artists; some 200,000 new songs are uploaded each month. That’s a lot of noise, but it’s also a big asset. Beneath ReverbNation’s interface f lows a river of data on up-andcoming artists that, the company came to realize, could be highly valuable—for musicians like Brue, for ReverbNation, and for the beleaguered music business. With the artist-development program Connect and other tools, the company is using a proprietary algorithm as part of a process that identiﬁes promising new talent and connects those artists with managers, labels, and other insiders. “We see ourselves as a partner to the

music industry, not a replacement for it,” says ReverbNation cofounder and CEO Mike Doernberg. “The economics have changed. [The industry] just can’t afford to invest the same amount it used to [in new artists] because the payoff isn’t as big. You have to make more bets and smaller bets.” To help do that, ReverbNation has created an algorithm that uses show listings, email-open rates, and other data points to sniff out distinctive activity around an artist. If a band is booked at a buzzworthy venue, starts getting played on an influential music blog, or is able to attract fans who live far away from the group’s home base, the system notices. “We use a whole array of different little signals,” says Simon Perry, ReverbNation’s chief creative officer and head of A&R. “The patterns that those signals make tell us something.” But it isn’t as easy as just pushing a button and summoning up a new superstar. “You can’t get a load of data and say, ‘This band with this data profile is going to be the next Coldplay,’ ” says Perry. “But

While ReverbNation is confident in its data, the human component remains crucial.

you can say, ‘For this band with this data proﬁle, history teaches us that we should do [certain] things.’ ” After an artist is ﬂagged by the algorithm, the company’s curation team—made up of former music journalists, DJs, and other knowledgeable insiders—gives a closer listen. Using a custom-built dashboard, they tag each artist to identify promising qualities and predict potential career paths. Some might write songs that seem best suited

W HERE TO SH A R E Three sites that are helping artists self-release their music—and run their business

SoundCloud

Bandcamp

ReverbNation

NOTABLE USERS:

Drake (above), Major Lazer, Rihanna

Alex G, Car Seat Headrest, Courtney Barnett (above)

Alabama Shakes (above), Imagine Dragons, Kacey Musgraves

Founded in 2007 as a free tool for electronic musicians, SoundCloud has grown into a key platform for musicians of every size and genre. In addition to uploading songs, artists can use a simple Twitter-style interface to connect with followers and reshare other musicians’ songs.

The nine-year-old song-sharing platform lets musicians create a storefront for selling albums, T-shirts, and other merch (the company takes a 10% cut). By providing a slick way for bands to connect to fans, Bandcamp has become the digital home for hundreds of thousands of artists.

The free, basic tier helps bands build pages to share music and promote themselves. For a fee, the company provides distribution to streaming sites such as Spotify and also offers other services. ReverbNation now also connects handpicked artists with labels, gigs, and similar opportunities.

56 FastCompany.com April 2016

for licensing to TV shows, movies, or commercials. Others might be a good ﬁt for a particular event, such as Summerfest in Milwaukee, or for a certain record company. “A label will call me and say, ‘Hey, I’m looking for a rapper from the Midwest with a really great story,’ ” says Perry. “I’m like, ‘Try these three.’ ” Connect, a talent-incubation program that ReverbNation launched in 2015, takes all this a step further. Only the most elite artists—as determined by ReverbNation’s data and curators—are asked to participate in the program, which provides one-on-one career advice from the company’s experts and even-moregranular data analysis of their strengths and weaknesses from a business perspective. ReverbNation doesn’t charge artists a fee for Connect or its other curation tools (most of the company’s current revenue comes from services like digital music distribution and web-hosting tools, which it offers via premium accounts). Instead, it takes a cut of any money earned through deals it brokers, whether it’s publishing, licensing, or a record contract. In the case of Sammy Brue, ReverbNation is acting as comanager with Red Light and taking a percentage of overall income that the company says is typical for an up-and-coming musician. Though it’s too early to know how well Connect’s initial batch of artists (about 360 so far) will fare, the program has already placed songs on TV shows such as Grey’s Anatomy and Shameless and scored publishing and management deals for musicians. Of course, Connect’s success depends on one thing: ﬁnding the right artists. And while ReverbNation is confident in its data, Perry believes the human component remains crucial—because ultimately that’s who’s listening. “Humans interact with music on an emotional level,” he says. “I know that sounds so flowers and trees, [but] the data is only helpful where it tells us about emotions.”

Daniel DeSlover/ZUMA Wire/Corbis (Drake); Erika Goldring/WireImage/Getty Images (Barnett); Mark Horton/WireImage/Getty Images (Howard)

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How I Get It Done

content about the region. But he knew better than to present it this way: “If you walk into a meeting with Disney or the Weinstein Company and say, ‘You should do this because it will make Middle Easterners feel better,’ nobody will listen.” Instead, Aslan got investors to sign on by reminding them that the average median household income for Muslim families in America is higher than for non-Muslim families.

Ke e p i t f u n At heart, Aslan enjoys the connective magic of storytelling. He modeled Rough Draft after the poetry readings he and his wife used to host in their home. On the show, he goes deep with top Hollywood writers, such as Norman Lear and Transparent’s Jill Soloway, in a nightclublike setting complete with backing musical guests and cocktails. Aslan and his guests settle in like it’s one of his old house parties.

Renaissance man “We used to celebrate people who were good at many things,” says the genre-defying Aslan.

Be a compar tmentalizer

Blurred lines Religion scholar and television host Reza Aslan on not picking a lane BY KAREN VALBY Photograph by Elizabeth Weinberg

58 FastCompany.com April 2016

Though Hollywood draws plenty of multihyphenates, only a few can claim the title “scholar-producer-host.” Reza Aslan first landed in the klieg lights as an academic with his 2013 bestselling book, Zealot: The Life and Times of Jesus of Nazareth, aided by a viral video of his exchange with a Fox News host who questioned if a Muslim scholar could credibly write about Jesus. His next move? Step into the interviewer’s chair. His talk show, Rough Draft With Reza Aslan, premiered on Ovation in February, and he’ll soon appear as host of CNN’s six-episode Believer series exploring world

religion. Through his BoomGen Studios, he’s also the executive producer of the new ABC biblical drama Of Kings and Prophets. “My whole life people have been telling me I have to choose,” says Aslan, “but I never wanted to do one thing.” Here’s how he made the transition into Hollywood.

Change up your pitch Frustrated by the lack of fully realized Middle Eastern characters in pop culture, Aslan launched BoomGen Studios in 2008 to create and incubate

Forget multitasking. Aslan’s strategy is streamlined focus. “When I’m a professor, I’m only a professor,” he says. “When I’m writing, I’m only writing. People know not to call me about other things on those days.” And nobody messes with his role as dad to his 1-year-old son and twin 4-year-old boys. “I insist on being there when my kids go to sleep and wake up.”

Project confidence “I tell my students, ‘Always say yes,’ even if you think you can’t do it,” he says. “Say yes and figure it out later.” Aslan says he’s as plagued by insecurity as the rest of us. But when CNN asked him to host Believer, he quickly agreed—and saved the anxiety about making the transition from producer to on-air talent for later.

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“I t’s k i n d o f c o u n t e r i n t u i t i v e,” Google cofounder Larry Page remarked a couple of y e a r s a g o. “N o r m a l l y i n a b u s i n e s s, y o u t h i n k a b o u t, ‘W h a t’s t h e a d j a c e n t thing that I can d o ?’ B u t m a y b e y o u can actually do more projects that are less related t o e a c h o t h e r.” 62 FastCompany.com April 2016

Back then, Page was explaining why his company—whose mission, officially, is to organize the world’s information and make it universally accessible and useful—had expanded to address everything from teaching automobiles to drive to researching ways to extend the human life span. At the time, the insight seemed classic Page, a heartfelt defense of unconventional thinking. Today it feels like something more: a premonition of perhaps the most radical, labyrinthine corporate restructuring of the digital era. Page released a letter last August announcing the reconfiguring of Google into a conglomerate called Alphabet. It described Alphabet as a new holding company that would be composed of independent operating units. The Google search engine and related businesses—including Android, Gmail, and YouTube, to name a few—would be just one of them, and although it wasn’t initially clear, Alphabet would be home to nine other companies, including Calico (the health care company whose goal is to lengthen life expectancy), Verily (the home of the company’s “smart” contact lens), X (its R&D arm), DeepMind (artificial intelligence), and Access (all of the company’s high-speed Internet initiatives). In February, Alphabet added its 11th unit when it elevated the think tank/tech incubator formerly known as Google Ideas into its own entity called Jigsaw. So what holds these far-flung enterprises together? And why have they been organized in this fashion? These are among the most critical questions facing Techland, investors, and anyone who competes with any piece of the company formerly known as Google—which includes almost everyone. Page has been typically reclusive since announcing Alphabet. (He was not interviewed for this article.) But that does not mean we can’t make sense of this newly arranged company. Page has never been content to stand still, compelled by hyperambitious efforts that he calls moonshots. Alphabet is itself a moonshot, hoping to overcome a raft of technological, social, and financial challenges endemic to a world of increasing change. To understand this larger imperative, we’ve focused in on six areas, each epitomized by the experience of—or model established by—another leading company: Microsoft, Nike, GE, Apple, Facebook, and Google itself in its earlier days. In deconstructing Alphabet’s opportunities and risks this way, a nuanced understanding of what Page might be after emerges. So far, Alphabet is off to a rousing start: Shortly after it announced its first quarterly results in February, it briefly displaced Apple as the world’s most valuable company by stock-market capitalization (a feat that the

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April 2016 FastCompany.com 63

64 FastCompany.com April 2016

old Google never accomplished). As Page explained in his August letter, “We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.” Here are the revolutionary ABCs of Alphabet.

Avoiding the Microsof t malaise

In the 1980s, the mantra of Microsoft founders Bill Gates and Paul Allen was “A computer on every desk and in every home, all running Microsoft software.” At the time, that goal was a moonshot. When the company achieved it, Windows and Office—which eventually boasted 90%-plus shares of their respective markets—yielded landslide results. Microsoft became the most prolific profit machine in history, with margins on its core software products that no other company could approach. Until Google came along. Since then, Google’s search engine has become the preeminent utility of the modern age, with an ad-revenue stream that continues to spout enviable profit margins. But within that success lies the seeds of trouble. And that is part of what Alphabet was created to combat. As Microsoft learned the hard way, when you have a once-in-a-lifetime business model, any other market you pursue pales in comparison. After conquering the PC world, Microsoft widened the scope of its ambition. It created the Xbox gaming system, moved into mobile, spent billions on the Bing search engine. These efforts largely disappointed: Windows Phone’s market share is now a rounding error, and Bing has never spent a year in the black. Even a blockbuster like Xbox couldn’t match the enduring windfalls generated by Windows and Office. Every dollar that Microsoft reaped on new ventures had lower margins than its core operations. Investors began to put a lower value on each dollar of Microsoft’s earnings; the stock stalled. Perhaps it’s not surprising that Microsoft developed tunnel vision, viewing every new technology wave as an opportunity to sell more Windows licenses. That, after all, was the crown jewel. Yet when Microsoft announced its first-ever dividend in January 2003, the move signaled to Wall Street that the company didn’t know what else to do with the $43 billion in cash that it had on hand. Microsoft’s status as a growth business began to crumble. Page’s Alphabet currently has $73 billion in cash on hand—a signal of just how pertinent the Microsoft comparison is. In turning Google into Alphabet, Page has made a clear statement to investors (and employees) that he is still focused intently on growth: Unlike Microsoft, Alphabet has plenty of areas in which to invest its cash. Even the streamlined Google unit has its own portfolio of moonshots, from virtual reality to machine learning. As Page noted in his letter, his company has done many things that people thought odd over the years and “many of those crazy things now have over a billion users, like Google Maps, YouTube, Chrome, and Android.”

ONE WAY TO UNDERSTAND ALPHABET IS AS A VEHICLE TO BUILD ESSENTIAL PHYSICAL INFRASTRUCTURE IN THE REAL WORLD. WHAT IF YOU WERE TO BUILD A NEXT-GENERATION GE TODAY?

What’s more, Page’s new structure has made it simple for investors to value the dollars coming from Google as distinct from the performance of the rest of Alphabet’s units. And Google looks stronger than ever. Revenue grew 18% year over year in the fourth quarter of 2015, with full-year revenue reaching $74.5 billion. Since more than $3 billion in costs have now been shifted to other Alphabet units, Google’s proﬁtability looks better too. Of course, to be a long-term success, Alphabet needs to prevent Google’s mammoth advertising business from becoming a crutch (or, worse, an albatross). That’s where the entirety of Page’s new structure comes in. By giving the Google operating unit more focus, the organization can adapt more swiftly and become a better version of itself. The same holds true for Alphabet’s other business units, which now have their own autonomy—and expectations.

Becoming Nike . . . sor ta

Hoverboards. Jet packs. Internet balloons. Agile (and terrifying) humanoid robots. Teleportation technology. We revere Alphabet for toying with these sci-fi pursuits. What other company would consider developing space elevators? Page has profound ambitions for these projects. Perhaps one day they’ll better humanity or transform the company’s core business. But for now, these “other bets” are splashing red ink on Alphabet’s income statement: $3.6 billion in losses in 2015, an 83% increase from the previous year. Many people view these gambits as Page and Alphabet’s president Sergey Brin’s folly, a collection of extravagant, imprudent distractions. Here’s another way to view the company’s costly moonshot habit: as a marketing expense. If there’s anything the Mountain View, California– based tech company effectively manufactures, it’s the mythology around itself. These fantastical ideas create a glowing halo around the company, fostering the perception that Alphabet is a place where magic happens, where the most innovative minds, from iPod creator Tony Fadell to life sciences’ chief Andy Conrad, come to tinker. In spite of Alphabet’s intent to be a holding company and not a brand, with each headline-stealing rumor of unrealized futuristic inventions within one of its divisions—X kills more than 100 concepts per year but makes sure we know about some of those too (including most recently an “automated vertical farming” system and a “lighter-than-air, variable buoyancy cargo ship”)—an army of new fans gets minted. No one has used this R&D–as-marketing framework to better effect than Nike. Its sprawling headquarters in Beaverton, Oregon, contain several “not-so-secret” secret research labs, such as the Innovation Kitchen, where top scientists and athletes invent the future of performance wear. Hushed excitement for what takes place in these labs energizes employees and consumers alike. The labs create a fine mist that helps keep the swoosh dewy and fresh, reinforcing the fact that Nike is special, different, and synonymous with cutting-edge culture. Nike doesn’t enlist the graffiti artist Futura 2000 or graphic designer Geoff McFetridge to create limited-edition products because they will deliver huge earnings. Just as with those secret labs, the collaborations animate Nike’s dream factory. Nike employees aren’t just making shoes and apparel; they’re part of something bigger: a global cultural movement of empowerment and fitness. That framing helps Nike with everything from brand value to employee retention. For Alphabet’s employees, the vast majority of whom work at Google, perhaps it’s not always so special to toil on search-engine algorithms and advertising optimization. Yet the big goals within Google, to connect more users and advance machine learning, are noble and inspiring, and, thanks to Alphabet’s moonshots, staffers are also engaged in a larger futuristic vision, a place full of “Peter Pans with PhDs,” as X’s Astro Teller puts it, where “you’ll find an aerospace engineer working alongside a fashion designer and former military ops commanders brainstorming with laser experts.” Connecting the quotidian digital advertising business to this culture yields immeasurable benefits. April 2016 FastCompany.com 65

Let’s reconsider that $3.6 billion Alphabet lost last year on its moonshots. Apple and Microsoft invested roughly the same amount combined on marketing, while Samsung spent nearly four times that. Many of Page’s bets, such as Nest, the smart-home-products company, have signiﬁcant potential to beneﬁt Alphabet’s business in the long term. And in the near term they reinforce a distinctive culture. Which, by the way, may be the best advertising of all.

Channeling GE

Go to Alphabet’s website, abc.xyz, and you’ll see a pile of wooden alphabet blocks. Unlike Google’s home page, there is no blank white box and blinking cursor awaiting your command. You can’t click on the blocks to learn more about Alphabet’s companies; it’s just a photo! But in that picture is a wink: A single block is turned on its side, revealing a bright blue G. Alphabet is, in essence, a pile of blocks ready to build the Google of our physical world. Google itself is our essential digital infrastructure: Search, email, navigation, documents. One way to understand Alphabet, then, is as a vehicle to build essential, modern, tech-powered physical infrastructure in the real world. The analogy here is to General Electric, the original technology conglomerate (before technology required software). It’s not that Alphabet plans to displace GE, rather that it seeks to develop GE–like businesses. What if you were to build a next-generation GE today? Instead of wind turbines and aircraft engines, you might try clean-energy kites and self-driving cars. You’d develop contact lenses that measure blood sugar (Verily), create hacks to our genetic code (Calico), and devote initiatives to robots (Replicant) and drones (Project Wing). You’d design cities where the physical environment is smart and reactive to human presence (Sidewalk Labs). Nearly every department inside Alphabet is building real, physical things, like burly arms to Google’s omniscient hive mind. As it happens, GE is moving more into the virtual world just as Alphabet moves toward the physical one. GE is using software to optimize the deployment of airplanes, locomotives, mining operations, oil rigs, wastewater treatment plants, wind turbines, and even city streetlights. Its Predix cloud platform serving these industries is a $5 billion business and growing; its energy-focused Industrial Internet of Things unit, Current, has another $1 billion–plus in annual revenue. (By comparison, all of the non-Google Alphabet companies combined generated just $448 million in revenue in 2015, with most of it coming from Nest.) GE is managing legacy infrastructure—just as Google is, in its way—at the same time that it’s building businesses that position it well for the future. Alphabet is Page’s bid to anchor his enterprise both in tangible, useful products and in a future that is still evolving.

Dreaming of A pple

If Microsoft is the company Alphabet fears becoming, Apple, with its financial might and cultural heft, is the company it aspires to be—though you’ll be hard-pressed to find folks at the Googleplex who will admit it. Apple has something that Alphabet doesn’t. From the beginning, when Apple introduced the Apple I, in 1976, it offered consumers a cohesive experience. That’s because cofounder Steve Wozniak personally engineered both the machine and its software from scratch. Four decades later, Apple is still building what Steve Jobs liked to call “the whole widget”—hardware, software, and services blended into a (mostly) seamless whole. It even custom-designs processors for the iPhone and iPad. This profoundly ambitious undertaking lets it create new experiences and control them, not only wringing as much juice as possible out of its batteries but as much profit as possible out of its products. By contrast, there’s Android. When Google announced its smartphone operating system in 2007, it made its platform free to hardware makers, 66 FastCompany.com April 2016

released the source code, and encouraged other companies to dig in and tweak it to their liking. “We hope thousands of different phones will be powered by Android,” said Eric Schmidt, Google’s then–CEO. If anything, Schmidt may have underestimated just how potent the Android proposition would be. Today, more than 8 out of 10 smartphones sold globally run the software, as well as tens of thousands of other devices, including tablets, watches, TVs, video-streaming boxes, cameras, and more, giving Google access to consumers on a scale that competitors can only fantasize about. Yet as dazzling as the Android story is, it doesn’t present a happy ending, because Google gave up two things to achieve this ubiquity. The first is profit potential. According to Oracle’s calculations in a lawsuit against Google, Android has lifetime revenue of $31 billion and profits of $22 billion. In contrast, in just the last three months of 2015, strong iPhone sales helped Apple score $75.9 billion in revenue and $18.4 billion in profit. In fact, Apple captures a staggering 94% of the smartphone industry’s profits, according to research firm Canaccord Genuity. The Android market has become highly commoditized, with many companies selling basic, metoo phones at a razor-thin profit, if not a loss. The conventional wisdom that Android’s massive market share would reduce the iPhone to near irrelevancy—as Windows did to the Mac in the 1990s—hasn’t panned out. Perhaps worse for Alphabet is its lack of control. Because Apple owns its environment, it can get new features into consumers’ hands with minimum friction. In September 2015, Apple and Google both updated their smartphone operating systems. Four months later, Apple’s iOS 9 was installed on 75% of iPhones. Conversely, phone makers and wireless carriers are notorious for holding up new releases of Android. Google’s new version, the excellent Marshmallow, had reached a measly 1.2% of Android users, leaving the remaining 98.8% running outmoded software. Google can’t even depend on Android as a source of eyeballs to look at its ads. Manufacturers are free to de-Googlize the Android experience— and often do. Everyone from Amazon to Chinese phone giant Xiaomi sells devices that replace preinstalled Google services with their own offerings. “What have these manufacturers done?” technology industry analyst and former Apple executive Michael Gartenberg envisions Google asking itself. “They’ve taken our children and are dressing them funny. This just isn’t the way things should be.” Google has been trying to impose more of its authority on licensees to keep the full suite of Google apps. A report last November on the tech news site The Information stated that the company is toying with the idea of designing its own chips, just as Apple has been doing for years. Still, having offered up Android to the world as an open platform, Google can’t simply say “never mind!” and reclaim it as a proprietary operating system à la iOS. If Alphabet and Google want to develop a “whole widget” strategy, their best option may lie in newer categories of consumer goods. That helps explain why Page spent $3 billion acquiring smart-home innovator Nest, now one of Alphabet’s autonomous operating units. And then there’s the white space of virtual reality. Cardboard, the minimalist system that lets consumers turn smartphones into bare-bones VR headsets using third-

ANOTHER WAY TO VIEW ALPHABET’S MOONSHOTS IS AS MARKETING EXPENSES. NO ONE HAS USED THIS R&D–AS-MARKETING FRAMEWORK TO BETTER EFFECT THAN NIKE.

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party gizmos that cost as little as $15, offers a fun, populist experience. Although Cardboard is likely too rinky-dink to pose a serious threat to technology platforms like Facebook’s Oculus Rift, in January, the Google unit signaled that it was ramping up its VR aspirations by naming a longtime company exec, Clay Bavor, as its ﬁrst VP of virtual reality. A month later, sources told the Wall Street Journal that Google was at work on a much higher-end VR headset, with its own display, processor, sensors, and cameras. That’s what Steve Jobs would have called the whole widget—and a sharp break from Android’s let-a-thousand-gadgets-bloom approach.

Entering the Facebook zone

During Google’s annual stockholder meeting last June— the last it would have as “Google”—the company’s top executives sat on stage as audience members lobbed questions at them that ranged from fantastical to inane. One attendee pestered chairman Eric Schmidt and Page about avoiding a Matrix-like dystopian future. Finally, near the end, a pressing query: “How do you see ad blockers affecting your revenue source?” The question tapped into a prevailing concern about Google’s business: While dominant on desktop, it risked being eclipsed on mobile, particularly by Facebook and its growing hold on both consumers and advertisers. According to the research group ComScore, 87% of mobile usage is within apps, where ad blocking isn’t yet an issue and where Facebook rules. Page, becoming animated, answered, “The industry needs to get better at producing ads that are less annoying and that are quicker to load. We’ve been kind of trying to pioneer that.” Page’s response signaled two things: that mobile could be vitally important for Google and, more subtly, that Alphabet was not about to cede the app universe to rivals like Facebook. Since that meeting, Google has reported that mobile searches have surpassed desktop ones worldwide and that it has developed several initiatives to tailor its results and ads. “We are seeing a major shift in consumer behavior toward micro moments,” recently elevated Google CEO Sundar Pichai stated during Alphabet’s first earnings call three months later. “These are moments of high intent when consumers are looking to find, buy, or do something.” Google introduced a new product that helps marketers reach existing customers via search. And as an example of the types of things Google can now do for advertisers, last fall Dunkin’ Donuts ran a mobile search campaign so that when people searched for “coffee near me,” it assessed both walking distance and wait times to steer people to the fastest cup of java. In terms of the app-scape, Google has now indexed more than 100 billion links within third-party apps so that 40% of searches return results from within an app in the top five. It also launched a clever feature that lets users download or “stream” mobile apps directly from search, providing that in-app info more quickly. Google credits all these advancements with being the primary driver of its revenue growth in the last six months of 2015 (although the company, unlike Facebook, does not break out financials for its mobile business). Overlooked in the sometimes simplistic analysis of Facebook being the present and the future (mobile) and Google owning the past (browser) is that Google, unlike Facebook, has strength in both areas. Notably, Google has five of the seven most popular apps in the United States, with YouTube at No. 2 and Google Search, Play, Maps, and Gmail in slots 4 through 7. (Facebook and Facebook Messenger take positions 1 and 3.) Meanwhile, Google has continued to deepen its dominance on the open web. In February, Google launched what it calls Accelerated Mobile Pages (AMP), an open-source initiative that enables publishers to build clean, lightweight versions of web pages, stripping out the glut of data-intensive back-end technologies so that pages load almost instantaneously. Several ad formats are restricted from AMP, and publishers are incentivized to comply: Faster-loading sites can lead to a higher ranking in Google’s search index. If this sounds somewhat like Facebook Instant Articles, you’re right, 68 FastCompany.com April 2016

except it’s for the whole Internet. Facebook wants to provide users with a big, blue sanctuary from the awful mobile web lurking outside, while Google is seeking to renovate the mobile web by blurring the lines between it and an app-like experience. This is a classic Google gambit—refusing to accept an “either-or” when it can transform it into an “and.” The same inclusive thinking is evident in Google’s approach to attracting the next several billion users to adopt its services. “We believe that someone in Indonesia should get the same quality email service or search results as someone in New York,” Pichai told investors, taking a light jab at Facebook and its controversial “Free Basics” service that provides only limited access to the web. “From providing Internet access in India’s railway stations to making Chromebooks available throughout the region, it reinforced what a huge opportunity we have to help the next billion users come online and to have great experiences with the whole Internet once they are there.” Facebook and Google will continue to spar in their efforts to get more than 5 billion people online and in their use of artificial intelligence and machine learning to be more useful to those billions. Although Google may no longer deliver Facebook’s current growth rates of more than 40%, its steady stream of significant enhancements keeps the company poised to deliver double-digit growth for the next several years. And as the analyst Colin Sebastian with Robert W. Baird said, “Growth in the teens is still very profitable, and that is what helps fund these other projects.”

Feeling Googl y, all over again

One of the most renowned stories in Google’s history occurred on a Friday in 2002, when Page grabbed a printout of the ads that accompanied search results, wrote “these ads suck” on it, and then posted it in the company kitchen. He wasn’t trying to belittle anyone. He wanted someone to fix a problem he’d discovered. By the following Monday, as then–CEO Eric Schmidt recounts in his book How Google Works, engineers had a solution that dramatically improved Google’s AdWords product. Page, like most techno-futurists, would seem to be immune to bouts of nostalgia. But recapturing that Friday-to-Monday problem solving of Google’s halcyon days, when it was first turning on what would become the greatest business model of all time, may be an exception. In the most basic ways, Alphabet is an effort to re-create that lost weekend, at the scale of Page’s ambitions today. The new conglomerate is theoretically designed to make change happen faster. In his letter announcing Alphabet, Page delineated several things that he is excited about in the transformation. One is “getting more ambitious things done.” Another is “empowering great entrepreneurs and companies to flourish.” His hope for the Google unit specifically is to get “even better through greater focus.” Page needs his company to remain competitive in the face of the most significant threats it has ever faced—from Apple and Facebook but also the likes of Amazon and Pinterest. And to do so, he needs tens of thousands of employees to embrace the speed that epitomizes Google’s search engine itself. This is why Alphabet is more than just a spectacular corporate reengineering. Page picked the perfect time to reset his company—at the very moment that analysts were heralding Peak Google. He knew that traditional corporate structure limits innovation at the pace he wants and needs. He broke his business into smaller pieces to make them simpler and focused them more narrowly to discourage drift and distraction, while trying to maintain the advantages of scale and resources and a compelling culture to recruit talent. Page isn’t ready to settle for status quo. He wants to make the world a better place—with electric cars and smart cities and universal Internet access and no more disease—and also find lucrative new businesses that keep the company part of the present and future. He wants everything, from A to Z. loop@fastcompany.com

ANNOUNCING THE

CRE ATI V IT Y COUNTER-CONFERENCE M AY 2 4–2 5 LOS ANGELES F O R M O R E I N F O R M A T I O N , V I S I T: f a s t c o m p a n y. c o m / f c l a

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FOOD

A matter of taste The signature chicken sandwich featured at David Changâ&#x20AC;&#x2122;s growing fast-food chain, Fuku, is meticulously crafted, a bit unexpected, and completely delicious.

David Chang is expanding Americaâ&#x20AC;&#x2122;s palate with his fast-growing Momofuku empire. Plus: 13 other culinary leaders who are bringing something new to the table. By Rob Brunner Photograph by Herring & Herring

April 2016 FastCompany.com 71

IT WAS 9:30 ON A FRIDAY MORNING, AND DAVID CHANG WAS ALREADY FURIOUS. The Momofuku Group founder was at one of his dozen-plus restaurants, Má Pêche in Midtown Manhattan, for a meeting with chef de cuisine Ian Davis and three sous-chefs. But Chang had arrived a bit early, and he decided to drop in on the kitchen with Davis and the others. Within a few moments, he was clocking mistake after mistake—a cascade of small lapses that, in the chef ’s mind, added up to an epic transgression. The butter was too cold. A whipped-creamtopped wafﬂe sat melting under a warmer. The breakfast-tray setup was all wrong, the salt-andpepper shakers had gone missing, and a server was handling toast without wearing gloves. Worst of all, a cook at the ﬂat-top griddle was overdoing the eggs. Eggs! Are you kidding me? Chang thought. Whoosh: that familiar jolt of 72 FastCompany.com April 2016

rage. He slid his arm around Davis’s shoulder, gripping hard to contain the fury. There was a time when Chang would have yelled, definitely at high volume and possibly at great length. He would have dumped the eggs in the trash, grabbed the spatula, and just cooked the dish himself, yielding soft eggs, yes, but also hard feelings. Chang would have made a scene, embarrassed his crew, ruined everyone’s morning and possibly the whole day, all without actually addressing the problems that caused the issues in the first place. But that was the old Dave. That guy was a superstar chef with a growing restaurant empire who was as famous for his standards as his intense flavors, and high-volume freakouts were part of the mystique. New Dave is doing everything he can to keep himself under control. Because these days, Chang is reaching for something bigger: He wants to turn his boundarypushing restaurants into a global culinary brand. As Momofuku continues to move beyond its New York origins, it will further spread a distinctive aesthetic that has already seeped into the American food scene in ways that diners might not even realize. That tiny, undecorated, no-reservation spot that just opened near you, serving fancy versions of lowbrow dishes made with top-quality ingredients and high-end technique? You can probably thank Chang. Over the past decade, he has helped transform food culture—and especially a certain kind of gritty, back-of-the-house chef sensibility—into a genuine social phenomenon. Already, Momofuku Group offers diners the Chang experience at restaurants in New York, Sydney, Toronto, and Washington, D.C. (The latest, a high-end, Asian-Italian experiment called Nishi, opened in New York in January.) It co-owns seven outposts of Milk Bar, a popular bakery that’s the vision of pastry chef Christina Tosi, and Photograph by Stephanie Gonot

Previous spread: Styling: Alex Brannian. This spread: Styling: Lauren Machen

PEOPLE CHANGING FOOD

Christina’s world Milk Bar founder Christina Tosi is being strategic about her quirky bakeshop’s expansion. “The growth has to feel as authentic as humanly possible,” she says. “If it doesn’t feel like me, if it doesn’t feel like Milk Bar, what’s the point? We’re not in it for the payday. If we were, we would’ve sold out a long time ago. We’re in it because we really believe in making something that’s different and that people love.”

PEOPLE CHANGING FOOD

DAV ID CH A NG’S HOLY R A MEN EMPIRE The Momofuku founder is conquering the food world on several platforms. Restaurants In addition to outposts in Washington, D.C., Toronto, and Sydney (1)— plus one opening soon in the Cosmopolitan in Las Vegas, Chang oversees New York favorites Momofuku Noodle Bar, Ssäm Bar (2), Ko, Nishi, and Má Pêche. Meanwhile, fast-food connoisseurs are flocking to Fuku (3), a fried-chickensandwich spot with three locations (and more on the way). Meal delivery This spring in New York, Chang plans to launch Ando, a service that couriers singular menu offerings to homes and offices. He’s also an investor in Maple (4), another N.Y.C. delivery service that’s quickly become popular. Grab-and-go Dessert outlet Milk Bar (5), the brainchild of Momofuku pastry chef Christina Tosi, sells unique treats such as cereal-milk soft serve, compost cookies, and “crack pie” at seven (and counting) locations.

Magazine With editorial director Peter Meehan, Chang owns the provocative food quarterly Lucky Peach (6). 1

Cookbooks Chang and Meehan coauthored the best-selling 2009 book Momofuku (7). Tosi has two of her own: Momofuku Milk Bar (8) and Milk Bar Life. Meanwhile, Lucky Peach has published a collection of Asian-food recipes (9) and in April will put out a book devoted to the art of sausage, called The Wurst of Lucky Peach.

Bar The BDX Margarita (10) is one of many cocktails on offer at Chang’s New York saloon, Booker and Dax, which is run by drink innovator Dave Arnold. Packaged products Chang’s signature spicy Ssäm Sauce (11) is available at his restaurants, select retailers, and on the Momofuku website.

operates three locations of Fuku, Chang’s casual fried-chicken-sandwich mecca, with more on the way. Chang is also an investor in New York’s booming food-delivery service Maple, and he coowns (and regularly contributes to) the ﬁve-yearold, award-winning food magazine Lucky Peach. Chang announced in February that a Momofuku restaurant and Milk Bar will open inside the Cosmopolitan hotel in Las Vegas late this year. Soon, his bold ﬂavors will tackle even more platforms. In March, he revealed the latest Momofuku project: a meal-delivery service called Ando, which is set to launch this spring in New York and will give Maple lovers a whole new set of desk-lunch options to obsess about. “Dave is a competitive person,” says Lucky Peach editorial director Peter Meehan, a longtime friend. “And he has become enamored with business. I think he wants to have a really big company. I think he’s doing the things that need to be done 74 FastCompany.com April 2016

to get there.” And while Chang loves to jokingly compare himself to North Korea’s Kim Jong-Un, he now believes that his business needs a leader, not a dictator. Someone who can motivate people not the way a chef often does—through fear—but like the best kind of CEO can: by articulating big dreams and inspiring people to help make them real. After pulling himself away from the Má Pêche kitchen disaster, Chang gathered the chefs around a table for their scheduled meeting. Dressed in dark jeans and a vintage-style Houston Astros T-shirt, with bedhead-spiked hair and a smattering of beard, Chang took a sip of Trader Joe’s green juice, pulled out his notes, and launched into a prepared lecture (he describes these sessions, which he holds regularly at his restaurants, as “classes”). But Chang couldn’t focus. He kept coming back to those screwups, ditching the script to pick over the problems he’d

just witnessed—not who was to blame, but what caused them, how to avoid them next time, and, most of all, how to be a leader. “I was so mad, I couldn’t contain myself,” he told the chefs. “But I did. When you see something wrong, you want to jump in and be the hero. Because you can do it—you can save it! But it’s a short-term ﬁx.” The question, he said, is how to anticipate problems and create better systems. “It’s like a puzzle: How do we make this work? And then it’s on to the next thing, and the next after that.” Chang spoke evenly, with the slightly biting tone of someone accustomed to being in charge; for emphasis he often smacked the table with his ﬁngertips or the edge of his hand, karatechop-style. “It’s never-ending,” Chang told the Má Pêche crew. “And if you don’t realize it by now, you are in the wrong business. This is not for sane people. Anyone who likes this shit is not fucking normal.”

Alan Richardson (1); William Hereford (2, 10); Gabriele Stabile (3); Celine Grouard (4, 6, 7, 8, 9)

The previous afternoon, I had met with Chang at Momofuku’s headquarters, which occupy the fifth floor of a prewar loft building near New York’s Union Square. Though the 38-year-old chef keeps a desk in one corner of the open-plan room, he can more often be found in the kitchen area or—as he was when I got there—making calls in the glassed-in conference room. It was just three weeks after the January opening of Chang’s much-anticipated new restaurant Nishi, and a whiteboard in the corner still displayed evidence of menu-brainstorming sessions. Chang finished his call, offered me a just-delivered Fuku chicken sandwich, and settled in to explain his vision for Momofuku’s future. Chang’s empire had started modestly. Built with a $100,000 loan from his father and a family friend, along with $27,000 of his own savings, Momofuku Noodle Bar, which opened in 2004, was a tiny East Village space that eventually

earned a big reputation for its umami-rich takes on Asian cuisine. Chang—then a 26-year-old graduate of New York’s French Culinary Institute who’d worked at Tom Colicchio’s Craft and spent a year studying Japanese food in Tokyo—was an irresistible character, mixing serious food skills with a screw-you irreverent charm, blending the elite culinary ambition of such chefs as Wylie

FO R C HAN G, TH E G OAL O F ALL T H I S G R O W T H I S S I M PLE: ”T O W I N.”

Dufresne with the sodium-soaked pleasures of high-American junk food. A second Momofuku restaurant, called Ssäm Bar, opened in 2006. Funded in part with money his dad raised by mortgaging his golf-supply store in Northern Virginia, where Chang grew up, the venture was risky. As was the menu—an odd Asian-burrito concept (pork and kimchi wrapped in a ﬂour pancake, say) that wasn’t an immediate success. Chang faced the possibility of losing not only his restaurants, but also his father’s business. “You just refuse to make it not work,” said Chang, whose projects have often struggled at the start. “It has to work. I just can’t understand any other scenario. But it’s a hard way of running a company. All I remember telling myself is, You can’t break. You can’t break, you can’t break, you can’t break.” Chang turned things around by concocting an inventive late-night menu that started April 2016 FastCompany.com 75

PEOPLE CHANGING FOOD

attracting New York food connoisseurs. It meant extreme hours for him and his staff, but customers loved it. That success inspired Chang to launch his first fine-dining establishment, Momofuku Ko, which opened in 2008 with an eight-course tasting menu and quickly became one of New York’s most celebrated culinary haunts. From there, the empire grew fast. “Dave is always trying to push himself to do something different,” said comedian Aziz Ansari, a big fan of Chang’s food who has become a friend of the chef ’s. “It’s very easy for someone that successful to make boring, safe choices, and he never does that. He always wants to take risks and do something new and exciting.” As Momofuku has grown, Chang has mostly pursued a series of short-term goals rather than some broader strategy—sometimes with surprising results. Nishi, his recent collaboration with Ko veteran Joshua Pinsky, was originally set to be an expanded Fuku. At the last minute, Chang and his team decided to try something new, settling on a melding of Italian and Asian cuisines. “I was like, you know what? Fuck it,” Chang said. “Let’s do it. That’s our strategic vision: Let’s just fucking do it.” Now Chang is looking to expand in a more deliberate way, a process that’s being steered by Momofuku Group president Andrew Salmon, who Chang brought in as his business partner in 2006 (“He didn’t want to do paperwork anymore,” Salmon recalled. “The first conversation we had, he said, ‘I hear you do paperwork?’ ”). In Momofuku’s first decade, the company built new restaurants mostly by reinvesting profits; in the last two years it started soliciting investments— from friends, family, and other relatively modest backers. Salmon is currently looking to take on even more investors, who he hopes will help fund the company’s next big wave of growth. Momofuku’s most valuable asset might prove to be Fuku, the quick-serve chickensandwich restaurants that are evolving into an entity that will operate separately from the parent company. Chang and Salmon hope to launch several more by the end of the year—in New York and beyond—including a new, larger version of Fuku in Manhattan by the end of summer. With its stripped-down decor and accessible menu, Fuku is easy to imagine as a staple of shopping malls and sports venues nationwide (a Fuku recently opened inside New York’s Madison Square Garden). Its signature product—a friedchicken sandwich that’s essentially a riff on Chick-fil-A, pickles included—is classic Chang: meticulously crafted, a bit unexpected, and completely delicious. It’s also typically irreverent; the sandwich comes wrapped in foil that’s stamped 76 FastCompany.com April 2016

with the word dericious. (“We know that could be offensive to some people,” says Chang, who likes to poke at Asian-food stereotypes. “But it’s literally how my mom says it.”) Chang and his team are currently working to expand Fuku’s sandwich offerings, possibly with a vegetarian option and perhaps even something akin to McDonald’s Filet o’ Fish. Meanwhile, Milk Bar, the Momofuku-backed baked-goods chain that Christina Tosi owns and operates, could grow from seven to as many as 14 locations this year. Its quirky desserts—with names like crack pie and compost cookies—are both playful and innovative, and their success is earning Tosi a mounting public proﬁle of her own (she’s currently a judge on the popular Fox cooking competitions MasterChef and MasterChef Junior). Tosi, a fellow French Culinary Institute grad, came to Momofuku in 2006 as a food-safety consultant, but Chang soon discovered her other talents and created a broader role for her. The pair hatched Milk Bar after retail space became available in Ssäm Bar’s building, and when it opened in 2008 as a to-go dessert counter, customers swarmed. Today, Tosi is working to deﬁne Milk Bar, which she acknowledges has always been “kind of the baby sister to Momofuku,” as its own distinct brand. “You’ll start to see Milk

“I D O N’ T K N O W I F I’ M TH E G U Y W H O CA N TA K E [ M O M O F U K U] F O R W A R D,” C H A N G S A I D. “IT W O U L D B E F O O L I S H TO T H I N K TH AT W E’R E N OT AT A C R O S S R O A D S.”

Bar become a bit more grown-up,” she said. “It’ll still have the hand-built, homemade feel, but I think it’s going be taken a little bit more seriously.” In addition to opening more stores, Tosi is also expanding her e-commerce and retail offerings (sandwiches and other savory fare are in the works) and is considering lessconventional ideas such as Milk Bar–branded vending machines. For Chang, the goal of all this growth is simple: “to win.” But his idea of victory is different from that of many other budding moguls. Though he says he’s had lots of opportunities to sell Momofuku, he is more interested in creating something big and sustainable that can improve not just his life, but that of all his employees. “I derive pleasure and enjoyment by building a place where a lot of people can benefit,” Chang said. “And I mean that. My goal is a utopian work environment where we can pay top dollar to our cooks, to our servers, to our dishwashers, everyone.” Chang likes to think about what happens when Momofuku employees head out after their shift. “When you have drinks with your friends, particularly in this business, you talk shit about your workplace,” he said. “I want this to be a place where people aren’t talking shit. They’re like, ‘Sorry, guys, I know you’re all unhappy with your jobs, but I love mine.’ ” As raw and critical as Chang can be, he is ferociously loyal to the people who work for him. “When I first joined this company, within a month or so, Dave invited me to lunch,” said Sam Gelman, who came to the company as a cook at Ssäm Bar in 2007. “He said, ‘One of my commitments to you is that you will never have to find another job.’ ” Today, Gelman is Momofuku Group’s culinary director. It’s the kind of story you hear repeatedly when you talk to people about Chang. “He’s got a knack for seeing talent, seeing hunger in someone, and giving them the opportunity to prove it,” said Tosi. “He wants to know that you care every bit as much as he does—that your care is so deep, it might be seen as crazy. That’s when you’ve got him.” Ravenous after the Má Pêche meeting, Chang climbed into the back of an Uber car and headed several blocks east, to an industrial kitchen located in a Midtown Manhattan basement. This unmarked space, tucked below a Thai restaurant, is at the center of Chang’s latest creation, a food-delivery service called Ando that at the time was still a closely held secret. Inside, chef J.J. Basil, who is overseeing Ando’s food, had prepared a tasting of items that would likely end up on the menu. Chang couldn’t wait to dig in. Ando is named, like (Continued on page 104)

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PEOPLE CHANGING FOOD

FA S T FOOD ON A MISSION With Locol, superstar chefs Roy Choi and Daniel Patterson are bringing high-quality eats to low-income neighborhoods.

It’s no surprise that Lena Dunham, Jon Favreau, and L.A. Mayor Eric Garcetti were spotted at the January 18 opening of L.A.’s newest celebritychef-helmed eatery. But when that restaurant is a fast-food joint in a poor neighborhood with so few culinary options that it’s considered a food desert, something unusual is going on. As residents of Watts are discovering, Locol isn’t a typical burger spot. For one thing, the chefs behind it are two of the country’s most celebrated: Roy Choi, who kicked off the food-truck boom with Kogi BBQ Taco in 2008, and Daniel Patterson, whose San Francisco dining temple Coi has two Michelin stars. (A third partner, Hanson Li, focuses on the business side.) Plus, Locol offers very different fare from its combo-meal-slinging competitors: food made from fresh ingredients that still manages to be fast and affordable. With locations planned in Oakland and San Francisco (and more to come nationwide), the partners explain how they’re bringing better food to underserved communities.

Cook up enough funding Opening the first Locol wasn’t cheap: In addition to building the 2,900-square-foot space, outfitting the kitchen, and designing the menu, the founders chose to provide compensation above minimum wage. In January 2015, they launched an Indiegogo campaign that raised almost $130,000 (and a lot of public awareness) thanks to backers including Gwyneth Paltrow. The rest of the reported $2 million budget came from investors in the worlds of tech and entertainment. “Everyone who participated in the first round really believed in the social justice and food-access aspects of Locol,” says Li.

Maximize collaboration Though Choi and Patterson are both used to being in charge, they quickly ﬁgured out how to work together—despite living in different cities. “I’d fly up in the morning and we’d be in the kitchen by 10 a.m.,” says Choi. “And we did a lot over email.” They also divided the labor: Patterson focused on the food while Choi tackled restaurant design, branding, and the overall 78 FastCompany.com April 2016

vibe. According to Choi, “Daniel’s the body, I’m the face. Then both of us collide with no boundaries and merge to be one.”

Keep it cheap The partners wanted to compete directly with chains like McDonald’s, but without turning to industrial food processing. They use inexpensive cuts of meat, incorporate lots of greens, and augment $4 burgers and sandwiches with fermented grains, which are low-cost and add bulk to the meat without sacriﬁcing taste or texture. “We looked at the ways people all over the world feed themselves well and inexpensively,” Patterson says. “We use umami ingredients, ﬂavors of fermentation, good acidity, and lots of herbs.” A typical meal at Locol costs about $7.

Nurture local talent In its ﬁrst few weeks, Locol was already serving about 700 meals a day. The team hired more than 50 staff members, all from the Watts community. The technique- and labor-intensive recipes meant workers had to be trained to really cook, not just ﬂip patties. Patterson developed their skills and palettes the same way he trains his team at Coi. “They need to taste the food, know that it’s seasoned right,” he says. “As Locol grows, we’ll bring some of the people we’re training in Watts to help us open new locations.”

Concentrate on community To Choi and Patterson, the restaurant’s Watts location is key, and not just because it’s exactly the sort of food-deprived neighborhood they’ll target with future outlets. Choi says the “character and hospitality of Watts deﬁnes some of the DNA of Locol,” right down to the menu: The BBQ turkey burger, for example, was suggested by store employees. As the chain grows, offerings will be customized for regional tastes. But in some ways, wherever Locol goes, Watts will follow. “We got very lucky to start in this place because of how strong a community it is and how deep the roots are,” says Patterson. “The soul of Watts is a fundamental aspect of our brand.” —Jonathan Ringen Photograph by Stephanie Gonot

Choi (right) and Patterson say demand at Locol has far exceeded their expectations.

PEOPLE CHANGING FOOD

THE SOIL S AVA N T

A radical new approach to raising cattle helped fourthgeneration rancher Cory Carman save her family’s land.

Twelve years ago, Carman Ranch, a 3,100-acre cattle-raising operation in Wallowa Valley, Oregon, was struggling; the grass, fast receding, barely supported the 300-animal herd. So Cory Carman convinced her family to turn to holistic ranching, a risky approach that involved eliminating chemical fertilizer, minimizing irrigation, and moving cattle methodically—keeping them in one place just long enough to munch the grass tops and drop fertilizing waste. Today, the grass on Carman Ranch grows thick. It supports 67% more cattle, and Carman’s organic beef sells at a 10% to 30% premium. Over kitchen tables and at cattle conferences, Carman educates other ranchers about the benefits of holistic land management. “They’re giddy about the potential,” she says. “It’s about getting more nutrients into the soil and getting more out of their ranches in return.” —Corie Brown

Cory Carman, seen here with a few of her Hereford cows, left a career in public policy to focus on the family business.

Photograph by Herring & Herring

RE V I V ING CHIP OT L E Food-safety expert Mansour Samadpour, president of IEH Laboratories, is helping the burrito chain recover from a food-poisoning outbreak.

Is it okay to eat at Chipotle again? It has been okay. When any food company has an outbreak, it ends. [At Chipotle] we added a ﬁnished-product testing program for all of the high- and moderate-risk items, like raw produce. Some items will be immersed in boiling water for ﬁve seconds, which gives a 99% to 99.9% reduction of microbes. The idea is to have a net in place when one safety measure fails. Chipotle will now prep some veggies in regional central kitchens, an approach taken by many fast-food chains. Does it have to abandon its locally sourced ethos to reduce risk? It’s quite possible to work with local producers and serve safe food. There’s a commitment to bringing local producers to the same level of food safety as national producers. Are there any current trends that could impact food safety? More companies are serving organic, natural food, but that doesn’t make it safe: Microbes are organic and natural. It’s better to set up systems properly in the beginning, rather than have to deal with an outbreak. Food safety is a moral obligation. —J.J. McCorvey Illustrations by Michael Byers

April 2016 FastCompany.com 81

PEOPLE CHANGING FOOD

THE END OF TIPS?

Danny Meyer, CEO of Union Square Hospitality Group, decided to nix gratuities. Here’s how it has been working so far.

82 FastCompany.com April 2016

Restaurant tipping has always been awkward. How much to leave? Do you include the tax? Did your server ever actually bring that sriracha you requested? It’s also not the fairest of compensation models, benefiting front-of-the-house staff rather than cooks, dishwashers, and other by-the-hour workers. That’s why last October renowned restaurateur Danny Meyer announced that he would begin eliminating tipping from his 13 New York restaurants, starting with finedining destination the Modern. —J.J. McCorvey D A N N Y M E Y E R CEO, Union Square Hospitalit y Group (USHG): I guess I’ve never met a mountain I didn’t want to climb. This is something I’ve been talking about for 22 years. When you go to a restaurant, you assume that the menu price pays the dishwasher, the florist, the landlord. You pay for the piece of fish, the wine. Then separately, you’re asked to pay for the waiter. For hourly workers in the kitchen, who can’t legally receive tips, it’s impossible to build a sustainable career. I didn’t

know how to be the coach of a team where the offense is thriving and the defense is hurting. E R I N M O R A N C h i e f c u l t u r e o f f i c e r, U S H G : In 1995, the minimum wage for tipped employees was $1.68, compared to $7.50 today. But line cooks were making $9 an hour in 1985, compared to [just] $11 an hour today. That dining room server is making signiﬁcantly more than our team in the kitchen preparing food. That doesn’t feel great. M E Y E R : We weren’t able to attract enough qualified cooks to our kitchens. When we started hearing about the $15-an-hour minimum for fast-food workers, cooks who trained at fine culinary institutions were up in arms. Every internal discussion came back to the inability to share tips with our cooks. Finally, we said, who wrote the rule that you have to [use] the tipping system? Not us. Let’s [instead] charge a menu price that accurately reﬂects the total cost to put food on your table. D I N O L A V O R I N I Direc t or of opera t ions, t he Modern: Our goal was to end up with very little difference in

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PEOPLE CHANGING FOOD

what customers paid, assuming that in the past they would have left, on average, a 20% gratuity. M O R A N : We landed on a base hourly wage of $9 plus a weekly revenue-share program. With the revenue share, we are mitigating some of the volatility associated with a slow night. In September, Meyer held a series of meetings at the Modern for the entire USHG staff. The idea was to get input on how to make the system work and also to win over skeptics. Servers, in particular, were worried about earning less. B E N T H O M A S Ser ver, t he Modern: There were a lot of questions. There was a lot of worry, doubt, and fear. Money was a huge concern. M E Y E R : We guaranteed that for at least the ﬁrst three months, you will not make a penny less than you would have made under the old system. There have been weeks we subsidized the [servers’] pay and weeks we didn’t. S A B A T O S A G A R I A C h i e f r e s t a u r a n t o f f i c e r, U S H G : We want to create opportunities for servers and kitchen staff to grow internally. There are [different] levels for these positions. As you gain experience and contribute more to the team, you progress to the next level and get more of the revenue share. This [clear path to advancement] puts our own employees in the driver’s seat. It’s no longer just about outlasting your colleagues. K A P I B E R H A N U L ine cook , t he Modern: Under the old system, you had to ask somebody for a raise, which is very uncomfortable in our industry. Every day was kind of a test where you prove yourself. If you had a bad two days, that means, Oh, I don’t feel like I should ask for a raise. It’s not like an ofﬁce job, where you do x, y, and z and you get promoted. As a cook, you’re kind of told, like, this is what you make.

The system went into effect at the Modern on November 19. New menus and wine lists were printed with a prominent line explaining the no-tipping policy, and checks now arrive without the customary line for a gratuity. The company says response has been highly positive so far, but not everyone on staff is convinced. M E Y E R : Our waiters have enjoyed this, because they don’t have to serve you with this cloud hanging over their head, where you’re wondering if the only reason they’re being nice is to help themselves to some of your wallet at the end of the meal. That’s not why they do it. J A S O N H O P P L E Senior ser ver, the Modern: Now we’re not always working those [busier] nights that are most needed to pad our pay. You have the opportunity to work a lunch shift here and there, then go home and cook dinner or go out with your partner. T H O M A S : Compared to when I was making tips, 84 FastCompany.com April 2016

I’m making about 15% to 20% less. That is a con to the whole thing. There are some positive things that help weigh that out. A lot of us were working overtime to make ends meet. A normal workweek would be about 50 hours, but [now] a lot of servers are working 40 to 45 hours at the most. B E R H A N U : [With the new system], I’m making maybe 33% more. It’s not a whirlwind of difference. But it does feel nice to do the things normal people take for granted. You can buy a coffee in the morning and you’re not like, Shit, I splurged on coffee, I should reel it in. You can live. In the past, a lot of us were working to survive. The company is still tweaking the mechanics of the program, and it’s possible the revenue-share percentage could increase. Meanwhile, another USHG restaurant, Maialino, adopted the policy in February with the new Union Square Café and others to follow. H O P P L E : People still try to leave tips. We adjusted our tasting menu for a gentleman who was pescatarian, and he left an extra $40. I said, “I know you’re aware [of the no-tipping policy], but I wanted to make sure that was your intention.” It’s what he wanted to do. At that point, turning it away just ruins the connection you made. J E N N I F E R R e c e n t l u n c h c u s t o m e r a t t h e M o d e r n : I work nearby and come maybe three times a year. I didn’t notice a difference in service—it’s always great. It was nice to be able to [tip more] for the people I like, but it doesn’t matter much to me. A B R A M B I S S E L L E xecutive chef, the Modern: We’ve seen a 200% increase in [cook] applications since we started. It’s been a huge change. M E Y E R : A lot of guests are willing to pay a little more for local produce, for responsibly raised animals. Now we’re explaining, “Guess what: You need to pay a little more for how we take care of people, not just plants and animals.” Tipping is like a bad drug, and it’s really hard to kick the habit. But more restaurants are joining us. I believe this is something that our industry and our society will ultimately embrace.

“T H E R E W A S A L O T O F W O R R Y, D O U B T , AND FEAR. MONEY W A S A H U G E C O N C E R N.” Ben Thomas Server, the Modern

MORE WHO M AT T E R Kara Goldin Founder HINT WATER

As soda giants grapple with plunging sales and consumers hunt for healthier options, beverage companies like Hint Water are finding ways to juice up old-fashioned H2O. Hint offers 23 varieties of fruit-tinged drinks (crisp apple, blackberry, etc.) and uses only fruit oils to add flavor—no sugar or artificial sweeteners. Starting Hint “was really a health initiative versus launching a beverage company,” says Kara Goldin, who is beginning to incorporate health-focused interactive videos and content into Hint’s offerings. Customers are gulping up her products: The company expects to become profitable this year after hitting an estimated $80 million in sales in 2015, which is nearly double its 2014 revenue. The brand’s brightly colored packaging is now a familiar presence at Whole Foods and other major grocery chains, and a recent expansion into caffeinated water has also helped drive sales (not to mention buzz). —Sarah Lawson

Nick Green and Gunnar Lovelace Co–CEOs THRIVE MARKET

Ecommerce site Thrive Market sells high-end natural products at 25% to 50% below market rates. Since it launched in 2014, it has raised $58 million in funding and attracted more than 195,000 members who pay a $60 annual fee. “People don’t join just for low prices and home delivery,” says co–CEO Gunnar Lovelace, who runs the company with Nick Green. “They trust the quality of our products.” Thrive is eager to spread its healthy-food message—and not just among the wealthy. For every new customer, it donates a membership to a family in need. —Claire Dodson

Megan Miller and Leslie Ziegler Founders BITTY FOODS

When a United Nations report heralded insects as the most sustainable source of protein, Megan Miller and Leslie Ziegler set out to make crickets a palatable meat alternative. Bitty Foods has developed everything from cricket flour (a nutritious blend with 28 grams of protein per cup) to Chiridos, which are air-puffed chips made from crickets, lentils, and spices. With Chiridos due to land in U.S. stores later this year, Ziegler hopes that consumers are feeling adventurous. “People just need to try it,” she says. “Any hesitation is usually erased after a taste.” —Kim Lightbody

Danielle Gould Founder FOOD + TECH CONNECT

In 2010, when many farmers and chefs were still depending on fax machines and handwritten invoices, Danielle Gould founded the networking platform Food + Tech Connect. The goal: unite food producers with digital creators through meet-ups and weekendlong hackathons. Thanks to connections made through F+TC, more small-scale producers are selling via online marketplaces and developers are creating cloud-based systems for restaurants. “We’re teaching people to prototype solutions,” says Gould. “It’s exposed everyone to new ways of thinking.” —Anya Hoffman Photograph by Herring & Herring

NO CHEESE, PL E A SE! How Bryant Terry, chef in residence at San Francisco’s Museum of the African Diaspora, is working to lower disease rates in food-insecure communities

Make it drool-worthy “People think of vegetarian and vegan food as bland,” says Terry. “I want to prove that a meal without meat can be amazingly satisfying.” His four cookbooks, including the 2014 hit AfroVegan, have earned a devoted following via recipes such as creole-spiced plantain chips and tofu po’boys.

Get their hands dirty In 2002, Terry founded b-healthy, an after-school program in New York that taught kids how to grow and cook fresh food. “They were trying food they wouldn’t have in any other circumstances, just because they made it,” he says. This spring, Terry will launch similar programs in San Francisco and Oakland.

Build a community At the museum, Terry hosts dinners designed to start conversations with people of color about “real-food” diets. “I’m not saying everyone should be vegan,” he says. “But for health reasons, everyone should eat more fromscratch meals. A plant-based diet is a tool for addressing the public-health crisis around food.” —Nikita Richardson

Lyft has been eating Uber’s dust for years. Can a series of smart partnerships steer the “nice” ridesharing startup into its own lane? By Rick Tetzeli Illustrations by Patrick Leger

April 2016 FastCompany.com 87

Long before there was Uber, 21-year-old Logan Green traveled to Zimbabwe. There, he encountered impromptu fleets of vans that shuttled people around Harareâ&#x20AC;&#x2122;s chaotic streets. Inspired, he returned to the United States

88 FastCompany.com April 2016

Photographs by Ian Allen

“We are in the first lap of a fourlap race,” says Lyft president John who along with CEO Logan Green (left) pilots Lyft’s strategy.

and launched a company called Zimride in 2007. It used Facebook to connect riders and drivers for long-distance trips. John Zimmer had nothing to do with the launch of Zimride, despite the fact that it echoes his name, but when he heard about it, it resonated. Zimmer had become obsessed with the idea of ride sharing in 2006 after hearing one of his professors at Cornell give a lecture on green cities. Can you imagine, Zimmer asked a schoolmate over beers, “this future where these pods would come to your doorstep, and they’d get people around, and you wouldn’t have to drive?” A friend introduced the two dreamers, and before long Zimmer quit his job as an analyst at Lehman Brothers to join Zimride. Their journey has been deeply intertwined with their personal lives. Green used to hitch rides from Santa Barbara to Los Angeles to visit his future wife; one of the ﬁrst things Zimmer did at Zimride was persuade the woman who became his wife to join him on a cross-country trek he called Zimride

Across America. The young execs have become best friends, and Green was Zimmer’s best man. Together, they pivoted from Zimride to Lyft in 2012 and introduced innovation after innovation into the ride-sharing business. “We’ve never been closer,” Zimmer says of his relationship with Green when I meet the duo at Lyft’s San Francisco ofﬁces. (The company stopped putting fuzzy pink mustaches on its cars long ago, but the ofﬁces still boast a “Willy Wonka” conference room that one enters by climbing through a faux portrait of actor Gene Wilder in character.) But the 33-year-old Zimmer, who resembles the all-grown-up Fred Savage, from The Wonder Years, could just as well be talking about Lyft’s prospects for success. Uber’s headquarters are a nine-minute car ride from where we are chatting, but its presence in the room is unmistakable. Today, Lyft is still a distant No. 2 to Uber, its dominant rival. Uber has many more drivers. It has many more passengers. The company has raised $10.3 billion from investors, at a valuation of $62.5 billion. Lyft has raised $2 billion, at a valuation less than one-tenth of that. Uber has launched its service in 68 countries, developed its own R&D facility to speed the arrival of autonomous cars, and is expanding into services to deliver to-go meals, groceries, and other goods. Lyft offers rides in the United States, ferrying only people from point A to point B. When I ask Bill Gurley—the Benchmark Capital partner who invested early and big in Uber, sits on its board, and often serves as the company’s de facto spokesman—to explain the difference between Uber and Lyft, he says, “Here are some differences I know of: Uber is 15 times bigger. Uber is No. 18 in the App store, and Lyft isn’t that.” (It was No. 122 when I checked later.) “Uber’s strategy is to be the low-cost provider. Similar to Amazon. A Bezosian strategy.” The Amazon analogy is telling. There is a prevailing view in Silicon Valley that technologyenabled marketplaces create winner-take-all competitions: think Amazon in e-commerce, Google in search, Facebook in social. The examples are powerful, the logic often deemed irrefutable. Uber is clearly the leader in ride sharing; by this calculus, Lyft must be the loser. Zimmer and Green never talk as if they’re playing for second place. In the past year, Green, the build-it CEO, and Zimmer, the market-it president, have doggedly unearthed a strategy that may well be clever and powerful enough for the company to carve out a strong competitive position. As Lyft worked throughout 2015 to achieve April 2016 FastCompany.com 89

WE’RE LYFT PEOPLE Ten of the high-profile investors and partners that have allied behind the United States’ No. 2 ride-sharing firm—to stop Uber parity with Uber on critical service details like price and wait time, it also developed a strategy to differentiate itself beyond being the “nice,” or quirky, ride-sharing service. “I always had this idea that we should try to find a few partners with similar values whom we could have long relationships with,” says Zimmer. Between July and January, they put together three remarkable partnerships—with Starbucks; with an international coalition of leading ride-share companies, including China’s Didi Kuaidi; and with Detroit behemoth General Motors. Together these deals create a distinct picture of how Lyft can compete with Uber. Lyft’s goal: establish itself as a distinctive, values-based alternative— the Nordstrom to Uber’s Walmart, the Virgin to its rival’s United. “We didn’t get into this to replace taxis,” says Zimmer. “That’s just a $12 billion market in the U.S. We want to create an alternative to car ownership, which is a $2.15 trillion market in the U.S. alone,” adding up the annual costs of buying, maintaining, and insuring vehicles. “It’s totally inefficient. The typical car is used for 4% of the day and usually by one person. So that’s 1% utilization of the second-highest household expense in the country.” It’s highly unlikely that a single company would reap all the rewards of disrupting a market such as this. “We really do expect more change in the next five years than we’ve had in the last 50,” says GM president Dan Ammann, who brokered the deal with Lyft. This isn’t a pure technology play but a case of software meeting an established and mighty industrial sector. Consider the range of competitors involved in this particular transformation—not only Uber and Lyft but also GM, Ford, Tesla, Toyota, BMW, Volkswagen, Apple, Nvidia, and Mobileye, among others—and the winner-take-all scenario becomes even harder to envision. The ride-sharing services are at the forefront of the most significant change to car transportation since Henry Ford introduced the assembly line. And Lyft isn’t about to cede the track to Uber. “We’re like that line I saw on an episode of Silicon Valley,” adds Green, also 33, his passion palpable despite his boyish, diffident demeanor. “ ‘I don’t want to live in a world where someone else makes the world a better place than we do.’ ” He’s joking, but Zimmer nods approvingly. After four years of preliminary heats, the race is finally on.

FIGHTING POWER WITH COFFEE In the first half of 2015, Uber raised a billion dollars from investors, secured another $1.6 billion in debt financing, lured some 50 engineers from Carnegie Mellon to launch its own robotics facility, and acquired a digital mapping company. It was a dominant burst of activity from a ruthless competitor. Zimmer went to Starbucks. Zimmer had long admired Starbucks CEO Howard Schultz for his management style and values and wanted to meet him. But how to arrange the right entrée? A friend from Zimmer’s Wall Street days introduced him to Bill Bradley, the former New Jersey senator and basketball star and current investment banker and Starbucks board member. When he sat down with Bradley, he stressed that “the two things almost every person needs in the morning are a cup of coffee and a ride to work.” Then he explained the ways in which he thought Lyft’s values, embodied by its “We treat you better” mantra, fit with those of Starbucks. Bradley, impressed, arranged a meeting with Schultz. Zimmer and a couple of Lyft execs flew to Seattle on June 25 for a dinner at Wild Ginger, a popular local Asian fusion restaurant. Nervous, Zimmer decided just before walking in that he didn’t like the color of the shirt he was wearing. He ducked into the restroom of the ice-cream shop across the street to change into another. Schultz recalls being less focused on Zimmer’s sartorial choices than his humanity. “I’m in the fortunate spot of getting to meet lots of young, aspiring entrepreneurs,” says the 62-year-old CEO of Starbucks. “Every once in a while, one hits an emotional chord with me. I quickly came to see a lot in John that reminded me of me. His ambition to build a great company is obvious, but he wants to build one that can last and serve the public as well.” “Howard started and ended the conversation with ‘What can you do for my baristas?’ ” 90 FastCompany.com April 2016

Marc Andreessen Cofounder and general partner, Andreessen Horowitz

The influential VC made his $60 million investment in Lyft after losing out on investing in Uber.

Carmelo Anthony Cofounder and partner, Melo7 Tech Partners

The NBA star has dubbed himself “the new digital athlete,” adding Lyft and a handful of other startups to his portfolio within a year of launching his VC firm.

Mary Barra CEO, General Motors

GM’s $500 million bet on Lyft makes it the first car company to partner with a ride hailer. They plan to codevelop on-demand, self-driving vehicles.

Prince al-Waleed bin Talal Chairman, Kingdom Holding Group

The Saudi prince participated in Lyft’s latest funding round, adding a $100 million investment to a vast portfolio that includes Apple and Twitter.

Carl Icahn Founder, Icahn Enterprises

The activist investor surprised the industry with a $100 million investment in Lyft last year, calling it a “tremendous bargain.”

Jean Liu President, Didi Kuaidi

Uber’s biggest rival invested $100 million in Lyft and created a strategic alliance last year that lets the two companies share riders across borders.

Jack Ma Founder and executive chairman, Alibaba

A major backer of Didi Kuaidi, the Chinese commerce giant has sought to expand its foothold in the U.S. via strategic investments.

Pony Ma Founder and CEO, Tencent

After forging an unlikely alliance with rival Alibaba to merge two Chinese ridehailing companies into Didi Kuaidi to blunt Uber, Tencent then backed Lyft in a funding round last year.

Howard Schultz Chairman and CEO, Starbucks

The progressive CEO endorsed the ridesharing service last year, orchestrating a customer-loyalty partnership with Starbucks and declaring, “Lyft is the company for us.”

Mike Shinoda and Linkin Park Founders, Machine Shop Ventures

The rock band opened its VC firm last year to expand its brand and counted Lyft as one of its initial investments, along with Shyp and Robinhood.

Zimmer recalls. “It reaffirmed our focus on the drivers.” Schultz adds, “The equity of Lyft’s brand is the driver, just as the equity of Starbucks’s brand is the barista.” A deal was announced just four weeks later. For now, the partnership is largely focused around connecting Lyft with Starbucks’s rewards program and creating perks for drivers: Lyft drivers automatically get Gold status in the Starbucks Rewards loyalty program, while Lyft passengers earn points in the rewards program with each ride. Soon they will be able to buy a cup of coffee for their driver via a tab in the Lyft app. Starbucks baristas can also get the occasional free ride to and from work via Lyft. Both Schultz and Zimmer say that this is only the first phase, with new developments coming this summer. “We are having discussions about how we can design the best possible experience to get both your coffee and your ride,” Zimmer says. How might this help Lyft in its competition with Uber? “They can’t possibly create something on their own that has thousands of great locations that are almost bus stop–like,” Zimmer says, “and they can’t invent the kind of ritual of coffee the way Starbucks has.” When Lyft first launched its carpooling service, Lyft Line, it tested “hot spots” for pickup. Might the concept reemerge at Starbucks’s 12,000-plus locations? Zimmer isn’t saying, but “there’s no other partner out there that can provide this kind of scale or future opportunity,” he notes. “We see this as a better way to get a bigger part of the ultimate market.” “John and Logan are building a long-term business,” says Schultz of Lyft’s dreamers, “not something that’s just for today. Starbucks will do as much as we can to support them.”

A WORLD OF FRIENDS If the Starbucks deal offered Lyft access to an expanded base of like-minded, mostly millennial customers (according to Lyft’s internal data, Starbucks is its passengers’ favorite coffee-shop destination), its next partnership took aim at Uber’s extensive (and expensive) international expansion. Rather than raise and then spend billions to attract riders overseas—Uber CEO Travis Kalanick admitted in February that Uber is losing $1 billion a year to compete in China— Lyft took a restrained, tactical approach. Eight weeks after announcing the Starbucks arrangement, Zimmer and Green unveiled an alliance with Didi Kuaidi, China’s biggest ride-share company, which also agreed to invest $100 million in Lyft. Under the agreement, Didi’s customers would be able to order Lyft rides via Didi’s app when visiting the U.S. and vice versa. In early December, the alliance expanded to include the leading ride-sharing services in Southeast Asia (Grab) and India (Ola). Suddenly, Lyft had the makings of an enviable global footprint. Both Zimmer and Green say they have preferred the idea of partnering ever since Alibaba signed on as an investor in 2014. But only after the leading Chinese ride-sharing services Didi Dache and Kuaidi Dache merged in February 2015 was a deal a possibility (the two were backed by rivals Tencent and Alibaba, respectively). A month later, in Lyft’s Willy Wonka conference room, Zimmer, Green, and Wang Gang, an Alibaba executive and Didi investor, sketched out on an oversize sheet the network effects that they believed would expand their respective businesses. Connie Chan, a partner at Lyft investor Andreessen Horowitz, translated when necessary. “Wang would go back (Continued on page 102)

“John and Logan are building a longterm business,” says Schultz. “Starbucks will do as much as we can to support them.”

April 2016 FastCompany.com 91

Just kids Neumann credits his wife and cofounder, Rebekah, with bringing a deeper soulfulness to WeWork.

MEMBERS ONLY

WeWork CEO Adam Neumann has built a Starbucks-style home for creatives to get #$%& done. All he has to do now is live up to his $10 billionâ&#x20AC;&#x201C;plus valuation, shush the haters, and bend society to his idealistic worldview. By Sarah Kessler

Photographs by Steven Klein

94 FastCompany.com April 2016

to New York from all over the world for WeWork’s second annual employee summit this past January. “There were only 250 people the first time. If you’re one of those 250 people who were here January of 2015, make some noise!” Screaming and applause. “Now, if you weren’t, raise your hands and make some noise!” Another wave of enthusiasm fills the cavernous old bank. “That’s the first lesson of teamwork,” Neumann concludes. “Two-fifty can easily make more noise than 900.” Neumann, who’s wearing a gray T-shirt that exclaims NEVER SETTLE, paces the stage, rhythmically waving his arm as he urges the group to reach for its full noisemaking potential. “I just want to share with you guys what is happening around you,” he says. The 36-year-old Neumann, with his shoulder-length dark hair, six-foot-five frame, and proclivity for black leather jackets, resembles a rock star. But the atmosphere here, especially at 10 in the morning on a Friday, is more tent revival than rollicking concert. Employees participate with the fervent obedience of true believers; there’s nary an eye roll in sight. “We have kids here from Seattle!” he shouts, and a roar erupts from a corner of the large room. Bursts of “Woo!” follow for “Brooklyn! San Francisco! Berkeley! We need more energy, Berkeley! Los Angeles! Denver! Chicago! Boston! Philadelphia! Atlanta!” Only one person pipes up for Atlanta, where WeWork will open in April, and Neumann pauses to allow the crowd to finish laughing at the contrast. “D.C.! Miami! London! Now, Amsterdam! Tel Aviv! Beersheba!”

Styling: Christian Stroble; hair: Tomo Jidai at Streeters London; makeup: Regine Thorre; production: LOLA Production NYC

A Beatles chorus bounces off the bare concrete walls of what was once J.P. Morgan’s headquarters. “Come together, right now.” The nearly 1,000 chattering WeWork employees who ﬁll the event space look toward the stage, expecting CEO Adam Neumann to appear from the wings any second now. Instead, he sprints down the center aisle, and giddy conversations evolve into a cheer. When John Lennon trills “Over me,” Neumann leaps onto the stage, sticking the landing. “Wow,” he begins, in his slight Israeli accent, as he turns to survey the crowd, which has traveled

“This company is 100% going to succeed,” Neumann says. “The question is, in 10 years, when we look back, how much?”

Neumann interrupts himself to share a quick story. “When my designers came to me and said we’re going to open a location in Beersheba, I said, ‘Really, Beersheeba?’ They said, ‘Yes, it’s a college town.’ And I said, ‘I was born there. It used to be a dump.’ ” The crowd chuckles. “They said, ‘No, it’s been a long time since you’ve been there; it’s a college town.’ So, Be’er Sheva!” Neumann shouts, using the Hebrew pronunciation. “Ferona!—That’s more like Tel Aviv—Tel Aviv, again! Shanghai! Mexico City! Toronto! Montreal!” Neumann has saved what he knows will be the best for last, and he pauses for dramatic effect before spitting out, “New York!” The majority of the room goes crazy. “That is a city that has achieved scale,” Neumann says, to more laughter. WeWork has 26 offices in New York. “All cities are going to sound like that in the next two to three years.” Neumann and his cofounder, Miguel McKelvey, founded WeWork in 2010 with a simple business model: The company rents office space from landlords wholesale, breaks it into smaller units, and subleases it at a profit. WeWork, which now has 77 locations and more than 50,000 members, says its ultimate potential is much bigger—and investors agree. In February 2014, WeWork’s backers valued the company at $1.5 billion; by last summer, its valuation had jumped to $10 billion, making WeWork, on paper, the world’s 12th most valuable private startup. Every modern generation has sought to remake the workplace, from the introduction of the cubicle in the 1960s to the 1990s’ foosball tables and flexible hours. Now members of the generation that would rather make a job than take a job are embracing coworking environments where they can operate independently while still drawing support and networking opportunities from peers. Neumann calls these people the We Generation, which, he says, “cares about the world, actually wants to do cool things, and loves working.” Critics look at WeWork’s business model of trading spaces and shrug, That’s it? Its high valuation has made it a staple of lists predicting which unicorn startups will fail. “Their multiples are more like a tech company than what a real estate company would get,” says Charles Clinton, who runs a real-estate-funding platform called EquityMultiple. “There’s a feeling that that doesn’t really make sense.” If the economy 96 FastCompany.com April 2016

wobbles, skeptics contend, WeWork’s customers will scurry back to cafés with free Wi-Fi. Neumann, who was envisioning WeWork with 100 buildings when he had only two, sees his company as an operating system that brings real estate to life in the same way that Android is an operating system that makes a smartphone more than mere glass and metal. As more spaces open and members join the network, WeWork will have increasing power to offer such services as shipping, software, credit cards, travel, payroll, banking, and training. Eventually, members might join for these benefits alone, without any physical access whatsoever. Neumann also envisions WeWork managing offices on behalf of corporations (which are cutting down on square footage per employee). WeWork will connect them all through an app-based network. “Real estate,” according to Neumann, “is just a tool.” He isn’t content simply to remake the modern office; he also wants to change how millennials think about home. WeLive, his new “co-living” residences, is a bet that they’ll value access over ownership. Just like they’re choosing Uber or Lyft rather than buying a car or subscribing to Spotify rather than having a record collection, they will be happy to share their living space, too. The first WeLive, which features common amenities with modest personal spaces, opened in New York City in January. According to leaked financial documents, the company plans to open 68 more in the next two years, the first step toward WeWork creating entire neighborhoods. “It’s a when, not an if,” Neumann says of WeCities. Of course, in order to follow through on

any of these plans, WeWork needs to convince young, urban professionals to buy into its philosophy of living and working together. Which is why, in addition to square footage, WeWork runs on something that doesn’t easily fit on a term sheet. You can call it a mission, a vibe, or culture. Neumann calls it “energy.” If anyone can create energy, it’s him. But is it enough to power WeWorld? When Neumann moved into his sister Adi’s New York apartment in 2001, fresh off his service in the Israeli military, what surprised him most was the silence of elevator rides. “Why is nobody talking to each other?” he remembers asking her. “We’re in the same building. How come you don’t know everybody?” In Israel, neighbors have almost the opposite relationship. “If I’m in a neighborhood and I need some salt,” he says, “I don’t even need to know the person. I knock on the door and I ask for some salt.” Neumann decided to turn making friends in the building into a competition. “Let’s see which one of us can meet more people on every floor,” he told Adi, “so after a month, we can go to that person, knock on their door, and see if we can hang out and have a cup of coffee.” Though he lost the friend-making game, it wasn’t because he was particularly unsuccessful. “She was a supermodel,” he notes with a smirk. By the end of the month, between the two of them, they had a friend on every floor. “The entire energy of the building changed,” Neumann says. Neumann had come to New York because he wanted to get rich, and everywhere he turned

“Rebekah said, ‘Stop. No more talking about money,’ ” Adam remembers. “We’re going to talk about wellness, happiness, fulfillment, and if the money is supposed to follow, it will.”

YOUR OFFICE, YOUR WAY When WeWork enters a market, it goes deep. Like Starbucks, the more WeWorks there are, the higher the demand. In Chicago, WeWork has leased more than 410,000 square feet of ofﬁce space across three neighborhoods since 2013, each offering potential members a distinct (and covetable) view of the Windy City.

RIVER NORTH 1. 111 W. Illinois Street

25,281 square feet When not taking in unrivaled views of the Chicago River and the iconic Merchandise Mart—once the world’s largest building— members of this WeWork can easily meet up with like-minded up-and-comers in River North’s growing tech scene. Perfect for the WeWorker who loves cool hunting. River North is home to more art galleries and design stores than any other Chicago neighborhood. 2. 20 W. Kinzie Street

105,000 square feet After Google moved its regional office to nearby Fulton Market, WeWork snatched up the tech giant’s former digs, which boast a rooftop garden, a heated underground parking garage, and an on-site fitness center. Perfect for the WeWorker who loves to shop. This WeWork is only a few blocks from the Magnificent Mile, Chicago’s premier retail district. FULTON MARKET 3. 220 N. Green Street

75,000 square feet Located in the heart of Chicago’s West Loop, this WeWork houses 900 desks across six floors in the 123-year-old Amity Packing Building, a former meatpacking facility.

Illustration by Cecilia Ruiz

Perfect for the WeWorker who loves to bike to work. The building is home to a state-of-the-art bike park, featuring secure, indoor parking for up to 75 bicycles as well as showers and lockers.

around the corner, members will find paragons of the Chicago School style, including the 121-year-old Marquette Building and Burnham’s own Rookery building.

6. 100 S. State Street

43,200 square feet In 2017, WeWork will take over more than half the available space in the five-story Amalgamated Bank build-

ing. As part of the deal, WeWork’s logo will be prominently displayed on both facades. Perfect for the WeWorker who loves the nightlife. Twenty-

something members will love this WeWork for its proximity to local universities and the hip hangouts that come with them. —Nikita Richardson

CHICAGO LOOP 4. 332 S. Michigan Avenue

50,000 square feet WeWork’s Grant Park office inside the 106-year-old McCormick Building lies along Chicago’s Historic Michigan Boulevard District and offers scenic views of Grant and Millennium parks and Lake Michigan. Perfect for the WeWorker who loves high culture. Along this short stretch of South Michigan Avenue, members will find the Art Institute of Chicago Museum, the Chicago Symphony, the Museum of Contemporary Photography, and the Chicago College of Performing Arts.

5. 125 S. Clark Street

112,000 square feet This new WeWork office, which formerly served as the headquarters for Chicago Public Schools, is in a building designed by Daniel Burnham, the master architect behind the 1893 World’s Fair and some of the city’s most iconic structures. Perfect for the WeWorker who loves architecture. Just

April 2016 FastCompany.com 97

he saw business ideas. (His ﬁrst venture, which failed, was making ladies’ shoes with collapsible heels, inspired by watching his sister walk to modeling auditions in ﬂats and then change into heels.) The friend-making game was no exception. It inspired him to enter an idea for community-structured real estate, which he called “concept living,” into a business plan competition at Baruch College. His was one of the few proposals that did not advance to the second round. “I didn’t even get a chance to present it verbally,” Neumann remembers complaining to the dean. “And [the dean] said, ‘There’s no 23-year-old, or any inexperienced real estate person, who will ever be able to raise enough money to do anything like ‘concept living.’ ” Still, the real estate bug stayed with him. After launching yet another curious startup for a single guy in his late twenties (baby clothes), Neumann fell in love with a former warehouse in his Brooklyn neighborhood, the loft-friendly, rapidly gentrifying Dumbo. He found the landlord, Joshua Guttman, and said, “Give me the building,” Neumann recalls. “And he would be like, ‘You’re in baby clothes. What do you know about real estate?’ ” Neumann shot right back: “Your building is empty. What do you know about real estate?” Eventually, Guttman, Neumann, and McKelvey cofounded GreenDesk, an environmentally themed coworking space. Their timing couldn’t have been worse, or so it seemed: It was the spring of 2008, and the economy was starting to buckle. Guttman lamented, as Neumann puts it, that “a real estate downturn makes everything not work.” The seeds of WeWork sprouted in Neumann’s reply: “This is not real estate,” he said, “and it’s actually gonna work better. People are gonna wanna be next to other people; some people are gonna get laid off; they’re gonna start new businesses; some companies are gonna wanna

downsize.” He was right. GreenDesk filled up, and Neumann now had grander aspirations. Neumann’s trajectory from serial schlepper to startup success happened after he met his future wife, Rebekah Paltrow. He admits that he was a bit of a mess as a 28-year-old, a struggling entrepreneur selling baby jeans with protective kneepads. “He was really, really thin, and he was shaking ’cause I think he was smoking too many cigarettes,” Rebekah says, sitting in Adam’s chair in his office at WeWork’s Chelsea headquarters. Adam, hair dripping wet from a shower after working the heavy bag near his desk, sits next to her and sips green juice from a straw. “And he walked in, and I saw that he was my soul mate. It’s the truth.” She did have some concerns. “You know you’re a big talker,” she told him, “but you can’t even afford lunch.” Like many couples, the Neumanns have their early courtship down to a routine, and Adam picks up the story on cue. “I said, ‘Well, I’m an entrepreneur, and money is tight right now; it’s all in inventory.’ She said to me, ‘Well, maybe you’re in the wrong business, because if you were doing the right thing, you would be able to afford dinner.’ ” Suddenly, the lights click off (they’re on an automatic timer to save electricity), and the Neumanns pause as we wave our arms to signal we’re still in the room. Adam continues where he left off. “[She said,] ‘I’m not so sure that you should be walking around, dragging these two suitcases full of baby clothes—’ ” Rebekah jumps in, “—that were falling out onto the sidewalk and also that didn’t actually fit babies. The limbs were like . . . ” She turns in her chair, her slender frame now facing Adam, forcing him to acknowledge sheepishly, “We had sizing issues.” Rebekah had done a lot before meeting Adam. She had traded stocks at Salomon Smith

Even Neumann can’t isolate what, precisely, it is about WeWork that is so amazing. “It can’t exactly be touched,” he says. “It’s a feeling.” 98 FastCompany.com April 2016

Barney. A student of Buddhism, she had stayed with the monks in Dharamsala and been to the Dalai Lama’s birthday party. She was fluent in three languages. She’d studied Jivamukti Yoga and toured with the hip-hop fusion combo Michael Franti & Spearhead. As she helped Adam quit smoking and soda—the two ritually dumped the artifacts of his bad habits down the garbage chute of Rebekah’s East Village apartment—she also introduced him to kabbalah and tempered his obsession with lucre. “Rebekah said, ‘Stop. No more talking about money,’ ” Adam remembers. “We’re going to talk about wellness, happiness, fulfillment, and if the money is supposed to follow, it will. And if it doesn’t, it doesn’t matter, because we will be happy and fulfilled.” This would become the foundation of WeWork’s mission. Neumann came to WeWork with a sharp business mind, a Navy-influenced leadership style, and ceaseless hustle. But Rebekah (and McKelvey) helped teach him about what WeWork executives often refer to as the “soul” side of the business. “My soul was attracted to ‘we,’ ” Adam says, “but it required some effort.” Rebekah pitched in at GreenDesk, where she helped McKelvey run tours and assist members, while Adam got out of the baby clothes business. At WeWork, she is a founding partner and chief brand officer. “We don’t have a line at all between work and life,” she says. “It’s not even a blurred line. There is no line.” Neumann now had a purpose (and a muse) to go with his entrepreneurial drive, and for the first time in his career, he started to see results. In 2010, Neumann and McKelvey sold their stake in GreenDesk and launched WeWork, which they envisioned as a global network of work spaces based on a brand that extended further than “green.” The only problem? They had no building. And only $300,000 to their names. Worse, most landlords at the time feared coworking, with its constant foot traffic and unknown tenants, the same way many also fear Airbnb. “We didn’t have credibility or credit,” McKelvey says. “We had no business taking out a 40,000-square-foot lease.” Neumann adds, “[The landlord] needed more, and I didn’t have more. All I had was my words.” Neumann convinced the landlord to rent WeWork one floor on a trial basis. Even more than words, Neumann, who is dyslexic, possesses chutzpah. He quickly learned the real estate business—Rebekah tells me his expertise “is like something from another life”—and he wasn’t intimidated by the powerful people with whom he wanted to do

Accelerating time to value business. When he met Chicago Mayor Rahm Emanuel, someone most people know not to antagonize, Neumann inadvertently, and then intentionally, insulted the mayor’s coworking project, and the two ended up cursing each other in Hebrew. Quickly, though, they partnered on a bike-parking station in one of WeWork’s Chicago locations. As one former employee tells me when I ask about Neumann, “I hate him, but I still can’t help but love him.” Neumann used the initial New York WeWork as a showpiece to entice other landlords and investors. “We toured their Grand Street location and absolutely loved the look and vibe,” says David Zar, who granted WeWork its second lease. To woo Benchmark Capital as an investor, Neumann insisted Bruce Dunlevie, one of the general partners, come to New York to see WeWork for himself. “We all said, ‘Nah, that doesn’t sound very interesting,’ ” Dunlevie recalls, “because it’s just a real estate business, and we don’t know anything about real estate.” After he visited, though, Dunlevie changed his assessment: “The unit economics at WeWork were already interesting, and there were reasons to think that they could get better.” By 2014, WeWork had 200 employees, 1.5 million square feet of space, and 10,000 members. Its business model—with gross margins of approximately 60%—made even the most hardened, stodgy real estate developers doubly bubbly. At a party in May of that year, celebrating the expansion of WeWork’s headquarters, Stephen M. Ross, the septuagenarian chairman and founder of developer Related Companies, toasted Neumann under a net full of white and black balloons. “Adam always says, ‘No schmucks and no assholes,’ ” Ross began. “But the definition of a schmuck is someone who rents a property at .5x and then that guy turns around and rents it at 1.5x.” Neumann, laughing, corrected Ross by holding up two fingers, to make clear that he was charging two times the going rate, even more than Ross thought. “Then, the definition of an asshole,” Ross continued. “Now, Adam is a nice guy, but every time I see him, he always says, ‘You asshole. You could have invested at [a] $200 million [valuation]. Now it’s $400 million.’ ” At the end of his speech, instead of lifting a glass, Ross took his turn ringing a gong—more than five feet in diameter—that Neumann had imprinted with the WeWork logo. (Neumann and company used to ring a smaller gong to commemorate every deal but stopped when “there were too many,” he says.) Two more of New York City’s biggest landlords—Bill Rudin, whose family owns 15 million square feet of

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New York City real estate, and Boston Properties CEO Owen D. Thomas—also took turns with the gong. In one of the last industries in which people still go to work in three-piece suits, Neumann, an entrepreneur with no money, who talked constantly of community and dressed like a teenager, had inspired the biggest players in real estate to buy into his vision. “Ideas are a dime a dozen,” says Jared Kushner of Kushner Properties, whose massive Dumbo office development includes a WeWork. “But it’s really the jockey that makes them work.” Even Neumann can’t isolate what, precisely, it is about WeWork that is so amazing. “It can’t exactly be touched,” he says. “It’s a feeling.” “It has to be the beer,” a coworker tells me, believing that the secret to WeWork’s success is the always-on-tap brew in its kitchens. But the “hip,” “fun,” “millennial” things people most often cite when they try to describe WeWork are almost irrelevant, as I discover while working from two New York locations this winter. The room full of old arcade games at the 222 Broadway location is empty all day, and the controllers for a nearby Nintendo 64 sit in a neat line, wrapped tightly by their cords in a way that suggests they’ve been undisturbed for some time. At the end of the day, I see only three people pull the famous WeWork tap. Mostly people inside of WeWork are just . . . working. Beyond the showy perks, there are hundreds of small design elements that help create that feeling. If anyone can articulate the secrets of this magic trick, it’s Neumann’s chief creative officer McKelvey, an architect and designer. When WeWork moved into its current headquarters (its 10th in six years), McKelvey was troubled by one particular open area. Instead of hanging out in the common space, members marched through it to their offices. So he spent eight hours just watching people interact in the space—and concluded that there wasn’t enough furniture to invite hanging out. The open space was too open. Late one night, he moved in more tables and chairs. “Literally, overnight change,” he says. The couches were full. People were using the standing table and sitting in the seats that McKelvey had set up. “That was a really amazing validation,” he says. “This might not seem like this makes a big difference,” he says as he gestures toward another detail, a large pane of glass that separates the room we’re meeting in from the hallway, “but it does. The wall system that we use—it has a loose feeling. It’s not perfect. It’s a 100 FastCompany.com April 2016

difference of being dressed in a button-down shirt with your shirt tucked in or wearing a hoodie. That’s how you make vibe.” People at WeWork feel comfortable taking their shoes off. They sit on windowsills, and they don’t even ask if you mind before plopping their MacBooks down next to yours at a café table. Startup teams sit in their tiny glass offices, whose transparency serves the dual purpose of preventing claustrophobia and reminding you that in this vast floor plan, even when huddled in your own personal hobbit hole, you are never, ever alone. Some members moan about long lines for the elevator (apparently not understanding that it’s an opportunity to play a friend-making game), a loud work environment, and being crammed into a tiny office, even if its walls do happen to be made out of glass. Others have more specific complaints. “First, 98% of the companies have moronic names,” explains a friend when I bring up her company’s WeWork space. “Second, no, I can’t go have wings and beer on the fifth floor at 3:45. Third, it is a pain in the ass to print things. Fourth, I have to bring my ID sensor everywhere, even the bathroom. It’s like the damn White House.” Even with these criticisms, the WeWork effect is more gym than coffee shop: It’s less about table space and Wi-Fi than about wanting to be in an environment where other people are also working hard. “They bring great energy,” Neumann says of WeWork members. “They turn the space on.” By packing people closer together, WeWork also makes much more money per square foot than it would with traditional offices. In Times Square, for instance, one of the most expensive neighborhoods in the country, the company pays $58 per square foot; on average it’s able to rent space to its members for around $160 per

square foot. The appeal for members: Their cost per office is cheaper (each member gets about 50 square feet), plus access to common spaces. Artie Minson, WeWork’s COO, keeps a running tally of new members on a large-screen monitor in his office. When we met in early February, the “this week” column was up to 838, which means that WeWork added something like $7 million of revenue to its run rate on office space alone. These numbers don’t include any business services WeWork might sell those members—and it was only Thursday. WeWork raised $434 million in June 2015, giving it that $10 billion valuation—and a target on its back. First, the union that represents cleaners in New York protested outside WeWork locations, labeling Neumann and McKelvey greedy because most of their contracted nonunion workers made just $10 an hour. Neumann tried to talk his way out—he approached the picketing cleaners, with a New York Times reporter in tow, and talked to them about his immigrant background and what they had in common—but he only ended up making things worse. “The last thing I was going to do was work with the union,” Neumann tells me, “because I didn’t believe that it’s fair to blackmail someone to do something.” Then Neumann sat down with Héctor Figueroa, president of the 32BJ Service Employees International Union. “Rather than talking about the issue itself,” Figueroa says, “he wanted to have a conversation about who we are as people.” The two ultimately came to an agreement where Neumann hired back some of the now unionized workers at $18.46 an hour with health benefits. At the end of their negotiations, Figueroa gave Neumann a union jacket, only the second time in his 17 years as a union officer that he remembers

“You expect [Neumann] to be this stubborn, strong-willed guy,” says WeWork vice chair Michael Gross. “And he’s the opposite. He will immediately shift if he thinks he’s wrong and you can prove it through logic.”

Accelerating protection extending this gesture toward an employer. “You expect [Neumann] to be this stubborn, strong-willed guy, it’s my way or the highway,” says Michael Gross, WeWork’s vice chairman. “And he’s the opposite. He really takes it in. He will immediately shift if he thinks he’s wrong and you can prove it through logic.” The union ordeal last summer coincided with the struggles of a handful of highly valued startups—Evernote, Dropbox, Instacart—to live up to the promise their valuations ordained, and the business media was quick to rope WeWork into the trend. Perhaps WeWork’s biggest sin was its aggressive projections: On track to open 40 new work spaces in 2015, WeWork planned to add a whopping 336 more by 2018, according to an investor presentation that leaked last August. Could the company really sign up 260,000 new members, plus get 34,000 people to join WeLive, in just a few years? (Critics also note that by banking its landlord discounts up-front, the company makes its current profitability look better.) What WeWork is counting on is that a sort of network effect kicks in as its membership community grows. Minson, who joined WeWork from Time Warner Cable, says he views WeWork as “programming for real estate.” That includes group discounts on back-office services like health care, payroll, and shipping, which WeWork has been steadily rolling out. But it also means the connections that form between fellow members—55% of whom end up doing business with one another, the company claimed last year. As Neumann puts it, when someone posts on WeWork’s member app that she needs an iPhone charger, “15 people offer one immediately.” Part recruiting network, part sales tool, part referral system, WeWork sees itself as becoming the LinkedIn you actually love. The programming concept surfaces again when I visit the first WeLive apartment building, in New York’s Financial District, in early February. Still a “beta test,” occupying only three floors of a planned 20-floor operation, the space feels like Dorm Living 2.0. While hardly the $11 million townhouse that the Neumanns own, it’s plenty cool for a twentysomething who’s moved to a major city after graduation—an affordable version of the apartments you saw on Friends, so long as you accept a small bedroom. WeLive, like WeWork, doesn’t tie you down with annual leases, and your expenses for furniture and inspirational tchotchkes fall to zero. Community managers arrange taco parties in the common space. The mail room doubles as a bar, and the laundry room houses an arcade to facilitate making friends. A giant sticker covers

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WeWork

Lyft (Continued from page 91)

the entire ground floor exterior window reminding everyone who enters the building that life is “better together.” Neumann, both of whose parents were doctors, says he moved 13 times before he was 22, making him a perpetual outsider. He was a conspicuous foreigner in his fourth- and fifth-grade classes, when his family relocated from Israel to Indianapolis. When they moved back a few years later, they lived on a kibbutz, one of Israel’s experiments in communal living. Neumann was the only kid who hadn’t grown up there. “Penetrating that community was one of the most difficult things,” he says, “but once I did, it was, as a child, my best experience.” In part because of their upbringings, Neumann and McKelvey—who grew up in a commune of mothers in Eugene, Oregon—are fluent in the rhetoric of movements. Neumann has expanded his We Generation philosophy to include what he calls “Me plus We,” which encapsulates his heightened ambitions. “On one hand, you want to be your own person, have your own goals,” he explains on stage at the WeWork Summit. “And on the other hand, you understand that being part of something greater than yourself is an amazing opportunity and actually makes you stronger.” WeWork’s inspirational mottoes—“Do what you love,” “Thank God it’s Monday,” among many others—its evangelical faithful, and gatherings like the summit all have religious echoes. I can’t help but think about the utopias that have popped up in America for more than 200 years. “Start imagining it a bit bigger,” Neumann says about WeLive, stoking his idyllic view, “an entire building. And then instead of having just one building doing it, five buildings doing it. Then you’ll be able to imagine what a WeNeighborhood or a WeStreet would be.” In the history of America’s utopias, of course, every single one has failed. A few days after the summit, Neumann and I are in his SUV swerving through New York traffic on his way to pick up his daughter at school when I bring this up. “I think you’re making a very good point,” he says. “I will help you with it a little bit. The reason most people did not succeed in this idea [of community living] before is that nobody was ever able to write the check.” What Neumann means is that without WeWork’s business, its mission of helping people find purpose in their life isn’t feasible. And without WeWork’s energy, its soul, its vibe—in other words, its brand—there’s no way to attract customers to the business. “A capitalistic kibbutz is not a bad idea,” he says. “You need both.” He doesn’t lift his eyes from the road. skessler@fastcompany.com

102 FastCompany.com April 2016

and forth in Chinese and English,” remembers Zimmer, “but when he got really excited, it was all in Chinese.” In April, Zimmer made a last-minute trip to visit Didi Kuaidi CEO Cheng Wei in Beijing. (“My wife, Christina, and I had been on a trip to Japan,” he tells me, “and she’d been acting different, although I didn’t know why. So when I decided to add on a trip to China, she went home to San Francisco—and found out she was pregnant.”) “They had built a great business focusing just on China,” says Zimmer of Didi. “This alliance is the right thing for our users, who will get the very best coverage, and for our investors, who don’t have to watch us spend billions of dollars on businesses that might go to zero.” The alliance, he adds, “allows us all to focus our investment and capital on the market where we can make the most profit, where we have local expertise.” While the nature of the partnership puts a ceiling on the revenue Lyft could make in these international markets, it allows Lyft to sidestep the headaches of being an American company trying to crack China, India, and Southeast Asia. Anthony Tan, Grab’s Singapore-based CEO, ticks off just a few of the local quirks he contends with: language and dialect barriers; cash as the dominant form of payment; the critical importance of bike sharing along with car sharing; and government regulations that would make any American disrupter quake. The global partners promise that by the end of this year customers will be able to use their native app to hail a ride in each of the four markets. As with the Starbucks deal, this is merely a first step. Zimmer and Green say they are in constant touch with their foreign counterparts (via WeChat), and friendships have started to develop. All the key players—Green, Zimmer, Tan, and Didi Kuaidi president Jean Liu—are in their thirties and share the camaraderie of peers. Or as Zimmer says, “We give each other a lot of shit,” as he tells me how he routinely makes fun of Tan for wearing tight shirts and never taking off his Beats earbuds, even when he’s making a speech. “I’m like, ‘Why?’ But that’s our style at Lyft. The first value here is be yourself.”

THROUGH THE WINDSHIELD On November 17, 2015, Zimmer walked on stage at the L.A. Auto Show to give a speech that he called, subtly, “Ending Car Ownership As We Know It.” After spending 13 minutes telling the world’s automakers why their business was about to disappear, he went off with Ammann, the president of General Motors, to seal the most signiﬁcant partnership to date between an automaker and a ride-sharing service.

The two had met a few weeks earlier at Lyft’s offices, when Ammann was in town for a Hewlett-Packard board meeting. Zimmer had had low expectations; the two companies had then been in discussions about how Lyft drivers could get better financing on GM vehicles. (Uber made such a deal with GM in 2013.) “We’ve had conversations with other car companies and they’ll talk about mobility [the academic term for alternatives to car ownership] and press announcements, but with Dan it was actually meaningful,” Zimmer says. “I was surprised that GM was so aligned with our vision.” Zimmer told Ammann that if GM really wanted to work with Lyft, it should invest in the company. The get-together after Zimmer’s auto-show speech lasted more than three hours. Ammann agreed to lead Lyft’s next funding round, and GM eventually put in $500 million. Again, the specifics came together quickly, in just a few weeks, with Zimmer weighing in via video-conference rather than traveling to Detroit, because his wife was about to give birth. (Zimmer’s wife, Christina, delivered their baby daughter, Penélope, on December 20. As it happens, Green and his wife, Eva, also had their first children last year, twins named Jack and Luke.)

“Our customers are demonstrating that while they still want the convenience of a car, they don’t want the hassle of ownership,” says GM president Ammann. GM, the 108-year-old manufacturer that was, for many years, the biggest corporation on the planet, acknowledges that its basic way of generating revenue is about to undergo a monumental shift. “Our customers are demonstrating to us through their actions that while they still want the convenience of a car, they don’t want the hassle of ownership, particularly in urban environments,” explains Ammann, a 43-year-old New Zealander with a background in investment banking. “We believe ride sharing and car sharing will grow signiﬁcantly, and the ﬁrst deployment of autonomous cars will be into ride-sharing programs, not to individual customers.” That’s an astonishing quote, because in 2015 Detroit’s Big Three sold more cars than ever before. If Ammann is right, history may view 2015 as it does 1920, when, as Barclays analyst Brian Johnson has pointed out, horse ownership peaked in the United States. The Lyft deal is a savvy hedge against the glue factory.

The alliance was announced in San Francisco on January 4. At first, the two companies will collaborate mostly on building a set of rental hubs where drivers interested in working with Lyft will be able to rent GM cars on the cheap. Ammann promises that the first of these will open by the end of March. The headlines about the deal have focused on the other aspect of the partnership: the two companies establishing a network of autonomous cars. The Chevy Bolt, GM’s 2017 200-mile-range electric car, may fit well with that plan; perhaps it will sell primarily into ride-sharing fleets rather than to individuals. An adapted Bolt would work especially well for intracity transportation, those 15-minute, 3.5-mile rides that represent the bulk of Lyft’s and Uber’s jaunts. Zimmer and Green believe that autonomous cars will start serving this role in just three or four years, spurred in part by urban millennials, who are not buying cars at the same rate they used to. (According to the University of Michigan’s Transportation Research Institute, just 69% of 19-year-olds even have driver’s licenses, down from 87% in 1993.) Whether autonomous cars, the next wave of transformation to hit the personal transportation business, will arrive right on the heels of ride sharing, or years later than Zimmer and Green predict, is a matter of much debate. “This isn’t just about some app,” one Lyft employee told me over lunch. Safety is an issue, along with many others: whether riders will pay by the mile, the hour, or some combination of the two; whether riders will subscribe to a car service, the way we subscribe to Verizon or AT&T for cell service; or how many people will continue to want to own their own vehicle. There’s also the vexing problem of what happens to the drivers, who Lyft says are the key to the community it is building around its brand. Zimmer insists that Lyft will still be guided by its priority of “treating people well,” but in this case the inexorable efficiency of technology may make that promise very difficult to keep. Zimmer and Green have patched together a strategy that fits their personality and ideals, and also sets Lyft up as a clear alternative. But the future will be as challenging as the past three years, “which have felt like 10,” says Zimmer. Green adds, “It’s good that we have such a foundation of working together. We’ve got that shorthand of communication, and the trust.” That word—trust—came up repeatedly in exploring Lyft’s partnerships, and it’s the answer to the skepticism I heard about Lyft. As one VC asked me, “Are these real deals, or just press releases?” Zimmer and Green have explicitly sought out like-minded souls, the same way they found each other. “Logan’s been the best thing: having a business partner that you trust completely with everything,” Zimmer says in response to Green’s compliment. That’s what they believe they now have with Didi Kuaidi, GM, Grab, Ola, and Starbucks. That’s what they’ll need to survive.

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David Chang (Continued from page 76) its parent company, after instant-ramen creator Momofuku Ando. (It is also Spanish for “I walk”— fitting for a delivery service. Momofuku itself is Japanese for “lucky peach,” hence the name of the magazine and also Má Pêche.) The business is a joint venture with Expa, a San Francisco–based startup lab built by Uber cofounder Garrett Camp. Expa is designing the app and overseeing logistics, while UberRush will tackle the actual food drop-offs. “We have a pretty big vision for it,” said Expa partner Hooman Radfar, Chang’s cofounder on the project. “But our focus is very much delivery to delivery, meal to meal, neighborhood to neighborhood, until we get it right. We want to make this feel great—like Momofuku at home.” Tosi is also heavily involved; she’s creating a line of baked goods, Milk Bar Life, that will be initially sold exclusively through Ando. Products will include cookie varieties such as salt and pepper, Ritz Cracker, and what she describes as “darn good, slap-your-mama chocolate chip.” To Chang, Ando will be no different from any other Momofuku restaurant—just with a slick app serving as the front-of-the-house rather than a packed dining room. As with every launch, he had been obsessively focused on perfecting the food: level of saltiness, degree of spiciness, portion size, and so on. When Chang arrived at the tasting, Basil had already laid out dishes in recycled-cardboard boxes on a prep table. The packaging was temporary; Chang was hoping to serve it all in traditional Chinese-food containers stamped with Momofuku’s peach logo. Each item had an identifying white card in front: TOFU GREEN BOWL, GRILLED CHICKEN BOX, CHEESESTEAK. The descriptions were boring. The food was anything but. The gigantic “cheesesteak,” a gut-stuffing combination of chicken, house-made American cheese sauce, and B&G pickled peppers, was Chang’s favorite. “It’s maybe the most dangerous thing I’ve eaten all year,” he said. “Last time I was complaining, ‘I’m so tired. It’s so heavy.’ J.J.’s like, ‘You dumbass: You ate two of them.’ ” Ando’s rollout will be complicated by the fact that Chang remains an investor in Maple, New York’s year-old meal-delivery service, which currently drops off $12 lunches and $15 dinners below 42nd Street, and is expanding fast. Its black-helmeted bike deliverers are now a lunchtime lobby staple, handing off stacks of brown-and-yellow bags to qualitystarved office workers. No cash is exchanged; tax and tip are included, à la Uber (Maple’s couriers are paid $14 an hour plus a bonus per delivery and are also offered health insurance and other benefits). One afternoon during the lunch rush, Maple CEO Caleb Merkl, who founded the company with Akshay Navle, gave me a tour of one of his 104 FastCompany.com April 2016

distribution centers, a gleaming, multiroom space in Lower Manhattan with high-tech cooking equipment and a clever food-making system that Merkl asked me not to describe. Basic prep work happens in a commissary in Brooklyn; ﬁnal assembly is done at spaces such as this one, which are positioned around the city. The company’s proprietary software keeps detailed track of every order from the moment a customer chooses a meal via Maple’s one-touch app. A unique algorithm groups orders and determines delivery routes, streamlining the process. Maple’s food is less distinctive than Ando’s will be, an ever-changing limited menu of salads, sandwiches, and entrées that’s overseen by Le Bernardin veteran Soa Davies. With its high-quality ingredients and careful preparations, it’s undoubtedly an improvement over typical midday ofﬁce fare (“sad salad lunches,” as Merkl refers to them). And the whole interaction—from the intuitive app to the carefully designed packaging—feels thoughtful and elegant. “We are going to serve meals to a huge number of people,” Merkl said, “and they all need to have good experiences.” Chang and Merkl insist that there’s plenty of room for both Maple and Ando—that nobody orders lunch from the same place every single day. They still talk on the phone several times a week, sharing advice and ideas. “It’s a giant pie,” Chang said. “I mean, Momofuku’s Noodle Bar and Ssäm Bar are [close to each other]. I don’t view them as competitors.” After downing his cheesesteak and trying the rest of Basil’s offerings, Chang moved onto several varieties of fried chicken. He’s hoping to offer a KFC–style chicken bucket as a secret Ando menu item, which in-the-know customers would be able to unlock in the app. “I’m so unhappy right now,” he said, looking not at all unhappy as he chased a bite of chicken with a swig of Diet Coke. “It’s too much. It’s just fucking good.” At Nishi one cold Saturday evening, a few weeks after it opened, the wait for a table stretched several hours. A tablet-wielding hostess guarded the front door, sharing the bad news with the fans lining up on Eighth Avenue. The restaurant (which, like Danny Meyer’s the Modern, has banished tipping; see page 82) would start taking reservations several weeks later, but that night, the only way to taste New York’s hottest new restaurant was through extreme patience. Inside, excited culinary adventurers squinted at menus while perched on high, backless chairs at communal tables. As servers talked up the bold dishes—the restaurant’s fermented-chickpea take on pasta classic cacio e pepe and anchovyand-mint-laced sweet potato earned instant food-world fame—chef Pinsky managed the kitchen, his prodigious black beard and heavily inked forearms visible through an open doorway. Chang had been spending a great deal of time at Nishi since it opened—greeting customers, sampling dishes, and (gently!) correcting

errant staff members. It’s one of his great skills, this ﬁne-tuning of a new spot, but it does raise a question: What will Chang’s role be at Momofuku as it expands? He is now confronting the possibility that despite all his efforts to create New Dave—after embracing meditation and poring through business-management books and befriending the kinds of guys who, as Meehan puts it, throw around words like valuation—there’s a chance that he isn’t the best person to take Momofuku where he knows it needs to go, and that maybe it’s time to bring in a more seasoned executive to run the company. “If someone can do this better than me, fantastic,” said Chang. “Because I am ill-suited for this position. Really! I don’t know how to do half the shit that we’re doing. I know how to run a kitchen; I know how to develop food. I know how to work with chefs. But the whole other side, of being a company head? There’s a lot I don’t know. I’m at a point where maybe I’ve given it the best that I’ve got, and I don’t know if I’m the guy who can take it forward. It would be foolish to think that we’re not at a crossroads.” Though Chang and Salmon have been talking to candidates, it’s of course quite possible that they’ll decide to leave things the way they are. Whatever happens, Chang will remain vital to the company he started. With culinary director Gelman in place to oversee the sit-down restaurants, he plans to focus much of his attention on growing Ando and Fuku, and there will always be young chefs to mentor, crazy ideas to pursue, endless new ways to spread the Momofuku brand. Maybe Chang will write a follow-up to his and Meehan’s 2009 best-selling cookbook, Momofuku. Perhaps he’ll do a new TV show; he and Meehan have been working on ideas—including a Chang-iﬁed version of an instructional “dump-and-stir” cooking program—that they’re currently discussing with producers. Or maybe he’ll just keep doing what he’s always done, relentlessly pressing everyone around him to get better, to push harder, to care as much—almost as much—as he does. After those long nights at Nishi, Chang often sent emails to the restaurant’s high-level staff, offering critiques both major and minor. A trout dish was excellent, he’d tell them, but a pasta needed more sauce. The lamb was “really good,” except for an issue with the seasoning: He didn’t think the Maldon salt was quite working, because it dissolves; the salt structure of sel gris, an ingredient that he generally doesn’t like, would hold up better on the meat. This kind of (literally) granular thinking is a big part of what’s made Momofuku so successful. But to take the company forward, Chang realizes that he won’t be able to control every minuscule detail the way he always has before. “The old me would be like, ‘We’re going to put sel gris on this,’ ” he told me. “But I’m not going to force them. I’m only suggesting it. It’s a good dish.” rbrunner@fastcompany.com

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My Two Cents

Jon Birger is a freelance writer. His book, Date-onomics: How Dating Became a Lopsided Numbers Game, includes sex-ratio data on all 50 states plus most U.S. cities. RINTE

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108 FastCompany.com April 2016

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This is the time of year when college seniors get deluged with grown-up advice—and, like Dustin Hoffman’s character in The Graduate, start running for cover. I had the misfortune of having a father who actually worked in plastics, which turned every family friend into a backyard comedian. (“Hey, Jon, I’ve got one word for you.”) Well, I have my own “one word” advice for this year’s graduates, and mine is way more interesting than plastics. It’s sex—or sex ratios, to be precise. Okay, that’s two words. But hear me out on why young people should consider sex ratios before accepting their ﬁrst job—and also why Silicon Valley recruiters should turn these ratios to their advantage. Women outnumber men when it comes to higher education. In 2016, 33% more women than men will graduate from four-year colleges, which is four women for every three men. In 1971, it was four men for every three women. Few people go to college just to ﬁnd a spouse, of course (and it’s important to note that not every student is heterosexual or interested in dating).

BY JON BIRGER Illustration by Alvaro Dominguez

The city you choose to work in could have far more impact on your future than whatever company you’d be joining.

FA S T C O MPA N

Let’s talk about sex ratios

But the uneven numbers don’t disappear upon graduation. They spill over into the postcollege dating market. According to the Census Bureau, in 2012 there were 5.5 million college-educated women in the U.S. between the ages of 22 and 29 versus 4.1 million men. Combine those numbers with college grads’ preference for marrying fellow grads, and you’ve got the makings of a demographic time bomb for marriage-minded women. Sex ratios do vary, however, from state to state and city to city, and this is why grads may want to include such data in their first-job checklists. Say a female grad’s choice is between working for Google in Santa Clara County, California, or Goldman Sachs in Manhattan. Manhattan has 39% more women than men among college grads age 22 to 29. Just ask single women in Manhattan how this plays out. Santa Clara County—a good geographic proxy for Silicon Valley—has 12% more such men than women. It’s arguably the best marriage market in the country for heterosexual women, with 78% of educated women in their thirties now married. Nationally, that figure is 69%, and in Manhattan, it’s 41%. Santa Clara County’s marriages are more stable too: Only 4% of women are divorced or separated compared with 9% nationally. Executive coach Elise Lelon says she sees firsthand how New York City’s gender imbalance affects the lives of unmarried female execs. “I had one client,” she says, “late twenties, a VC, smart, beautiful, making enviable money—absolutely miserable.” The woman relocated to San Francisco. “From the moment she got off the plane, she was flocked by men. One year later, she’s engaged.” Lelon knows—as I do—that advising women to worry about marriage in their twenties may sound anachronistic, or worse. But she makes no apologies. “Men can wake up at age 50 and have families,” she says. “But because of biology, women need to think more holistically. Engineer a whole life, not just a professional one.” Do I expect Northern California tech companies to start touting demographics in order to solve their gender-diversity issues? Probably not. But Amy Andersen, the founder of Linx Dating, a Silicon Valley matchmaking service with lots of nice-guy clients looking for Mrs. Right, wishes they would. “Facebook and Apple offer egg freezing,” she says. “Why wouldn’t they also market the benefit of a more fruitful personal life outside of work? Because when it comes to marriage, the odds here really are stacked in women’s favor.”

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YOU CAN’T BUILD THE BUSINESS OF TOMORROW ON THE NETWORK OF YESTERDAY. It’s no secret: business has changed—in every way, for every business. Modern technologies have brought new opportunities and new challenges, like BYOD and a mobile workforce, that old networks just weren’t built for. While demand on these networks has increased exponentially, networking costs have skyrocketed and IT budgets haven’t kept pace.

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