The once and future richest person in the world (once the Bezos divorce finalizes), Bill Gates will happily apply the dispassionate, sharp-elbowed logic that made him one of the most fearsome business minds of the past century—even when the subject, abstractly, is him, as well as the other, suddenly unpopular members of the Three Comma Club.
“I think it’s fascinating that for the first time in my life people are saying, ‘Okay, should you have billionaires?’ ‘Should you have a wealth tax?’ I think it’s a fine discussion.”
It’s a discussion that took place yesterday just a block from Trump Tower, home of America’s first-ever billionaire president. “My opinion is that there should be an estate tax and maybe even higher than we have today. Among The Forbes 400, I don’t think we’d get a majority—Warren [Buffett] and I are sort of against interest on that,” says Gates. “So I think there’s plenty of debate about how capital should be taxed, how estates should be taxed.”
But as for the kind of disincentivizing economics lamented by the Beatles in “Taxman” and increasingly championed by America’s far left, Gates remains clear: “The idea that there shouldn’t be billionaires—I’m afraid if you really implemented something like that, that the amount you would gain would be much less than the amount you would lose.”
In looking at how Gates now deploys tens of billions philanthropically—both the money he and his wife Melinda put into their eponymous foundation, the world’s largest, and that given and pledged by Buffett—it’s critical to understand that perspective.
Just as Gates views, correctly, that a tax system moving from progressive to confiscatory creates less wealth and innovation overall, he and Melinda examine issues systemically.
“It’s more evocative to say you’re saving one life than to say you’re saving a million,” he says. “It’s a weird thing.”
That worldview comes through in the 2019 edition of the Gateses’ annual letter, released this morning. Ostensibly, this year’s letter, which lays out their philanthropic observations and priorities, focuses on nine surprises that have inspired the Gateses to take action. In reality, it’s a valentine to the power of philanthropic investment—the idea of giving not to salve problems, but to solve them.
“I think it’s fascinating that for the first time in my life people are saying, ‘Okay, should you have billionaires?’”
The Gateses write about Becoming A Man (BAM), a group counseling program that helps teenage boys stay in school by channeling their anger. (Bill Gates says he had a “touching experience” sitting in on a group, and even took his turn to vent—about learning that global polio cases were going up.)
And their “toilet fair” in Beijing, designed to inspire a next-gen toilet that can alleviate sanitation issues. Their fixation on Africa, whose young population promises to transform the global labor force.
All of these initiatives tell a similar story. They’re about “picking novel ideas” or “off-the-wall theories,” as Gates says, and then proving that the concepts work. “Once you find a solution and want to scale that up, it’s usually government money.”
That’s a sticking point when dysfunctional Washington can’t enact even the most obvious forward-thinking policies. Take foreign aid, less than 1% of the U.S. budget and an expenditure that, since the Marshall Plan, has consistently generated positive ROI, in terms of creating stability and vital trading markets and stemming deadly diseases.
While Congress rejected President Trump’s proposed foreign aid cuts, Gates remains worried. “It just can’t be ignored, given the intensity of political debate over domestic issues—and if you have one party saying, ‘Hey, helping foreign countries, that’s kind of a sucker’s deal, does it even benefit us?’”
This shortsighted nationalist streak is a global issue. “We’re very worried that if Brexit goes poorly, at least for a time, [the U.K.] might not see [foreign aid] as a priority at all,” he says. “If the French domestic stuff gets too painful, will they stay generous?”
In education, Gates has faced similar headwinds. “You get into political policy things in terms of what you’re trying to achieve. It’s tricky.” The most obvious example here: his previous battle for the Common Core education standards, which critics like Diane Ravitch undermined by terming such efforts a “billionaire boys club.”
“The attack that ‘Why should you even have a say in setting the agenda?’—that has a certain resonance to it,” admits Gates.
So why should billionaires get to choose what problems we’re solving?
“Philanthropy is there because the government is not very innovative, doesn’t try risky things and particularly people with a private-sector background—in terms of measurement, picking great teams of people to try out new approaches,” says Gates. “Philanthropy does that.”
Philanthropy, as practiced by the Gateses, also takes risks in the existential terrain political leaders would rather bury their heads in. Bill Gates still worries about nuclear proliferation, an area his partner-in-crime Buffett has championed. He’s been the global leader on the risks around pandemics and also, to a lesser degree, climate change, where his $1 billion Breakthrough Energy Ventures fund makes big bets.
Artificial intelligence looms on the horizon as the newest threat brought on by innovation. “In the long run,” says Gates, “AI is a tough problem.”
Notably, Gates does not feel that way about social media. Last century’s boy wonder, who faced scrutiny for what the federal government saw as Microsoft’s monopolistic tactics, clearly has empathy for this century’s boy wonder, Mark Zuckerberg, now a lightning rod for Facebook’s role in the erosion of democracy, as most recently outlined by Facebook investor Roger McNamee.
“I think what Roger [McNamee] has said is completely unfair and kind of outrageous,” says Gates. “They’re blaming Mark for everything. I mean, Trump was not elected because of Facebook. They say ‘filter bubble.’ All these polarization things. … Well, be clear. I get to read whatever I want to read, I get to listen to right-wing radio, I get to listen to Fox News. You kill Facebook and I can still live in my filter bubble. But filter bubble is not just my Facebook feed, so acting like, ‘Hey Mark, wake up someday and solve the filter bubble problem.’ No, Roger McNamee has no practical solution to the filter bubble thing.”
“They’re blaming Mark for everything. I mean, Trump was not elected because of Facebook.”
(“It’s hard when you’re in this vortex,” adds Gates. “I was in such a vortex once upon a time. A little bit different because mine was more of a court-related thing than the broad view of whether the software was good or not.”)
Ultimately, Gates, whose net worth, even after large donations to the foundation, approaches $100 billion, views philanthropy as a vital force for good. And he thinks that potential critics—even a loony potential British prime minister—will come around to that view.
“When I met with Jeremy Corbyn for the first time, does he view me as the billionaire guy who collected more money than he thinks anybody is supposed to collect?” recalls Gates.
“Or does he view me as the philanthropist who’s helping improve Africa and hopefully learn about education? Fortunately he was very nice, he viewed me as the second. But I’m sure he had to hesitate: ‘This guy is one of those people that maybe there should be none of’.”
-Randall Lane, Forbes Staff
Leaving Airplane Middle Seats Empty Could Cut Coronavirus Risk Almost In Half, A Study Says
A new research paper from the Massachusetts Institute of Technology estimates that blocking out the middle seat on airplanes could cause the likelihood of passengers being infected with coronavirus to drop by nearly half, just as some airlines are starting to book flights to capacity again.
- According to the MIT paper (which has not been peer reviewed) the chances of catching coronavirus from a nearby passenger on a full airplane when all coach seats are filled is about 1 in 4,300.
- However, those odds drop to 1 in 7,700 when all the middle seats on board are left empty, the paper states.
- Taking into account a 1% mortality rate according to the statistical model, the likelihood of dying from a coronavirus case contracted on a plane is far more likely than dying in a plane crash, which has odds of about 1 in 34 million, the paper stated.
- In “Covid-19 Risk Among Airline Passengers: Should the Middle Seat Stay Empty?” the author of the study, Arnold Barnett, wrote that his analysis aims to be “a rough approximation” of the risks involved in flying during the coronavirus pandemic.
- “The airlines are setting their own policies but the airlines and the public should know about the risk implications of their choices,” Barnett told ZDNet this week.
- The paper comes just as more flight carriers, like American Airlines, begin booking flights to full capacity despite surges of the virus across the country.
The coronavirus pandemic has been disastrous for the travel industry, and has especially hurt airlines. Major American carriers including American, Delta and United have asked employees to take buyouts and early retirement, Forbes reported, in a bid to cut costs as the pandemic causes them to bleed cash. United Airlines warned this week that it could be forced to furlough 36,000 jobs, or nearly half of its American workers, starting in October if travel doesn’t pick up. In April, the airline estimated that in the first quarter it lost $2.1 billion pre-tax, Forbes reported, and was losing $100 million a day in the last half of March. Boeing CEO Dave Calhoun said in May he expects a major airline to go out of business in 2020 as a result of pandemic pressure.
American Airlines announced two weeks ago it would begin booking middle seats again starting in July, although the carrier will allow passengers to switch from a full flight without any extra cost, Forbes reported. United is also selling tickets for middle seats. American Airlines took flak earlier this month when Sen. Jeff Merkley (D-Ore.) tweeted a picture of his crowded flight.
WHAT TO WATCH
If airlines continue to extend their policy of keeping middle seats blocked off or if they’ll be forced to book to capacity to turn a profit. Southwest and Delta have both committed to keeping their middle seats blocked off until at least the end of September, while JetBlue will do the same through July, according to the Washington Post.
From The Arab World To Africa
In this exclusive interview with FORBES AFRICA, successful Dubai-based Emirati businesswoman, author and artist, Sheikha Hend Faisal Al Qassimi, shares some interesting insights on fashion, the future, and feminism in a shared world.
Sheikha Hend Faisal Al Qassimi wears many hats, as an artist, architect, author, entrepreneur and philanthropist based in the United Arab Emirates (UAE). She currently serves as the CEO of Paris London New York Events & Publishing (PLNY), that includes a magazine and a fashion house.
She runs Velvet Magazine, a luxury lifestyle publication in the Gulf founded in 2010 that showcases the diversity of the region home to several nationalities from around the world.
In this recent FORBES AFRICA interview, Hend, as she would want us to call her, speaks about the future of publishing, investing in intelligent content, and learning to be a part of the disruption around you.
As an entrepreneur too and the designer behind House of Hend, a luxury ready-to-wear line that showcases exquisite abayas, evening gowns and contemporary wear, her designs have been showcased in fashion shows across the world.
The Middle East is known for retail, but not typically, as a fashion hub in the same league as Paris, New York or Milan. Yet, she has changed the narrative of fashion in the region. “I have approached the world of fashion with what the customer wants,” says Hend. In this interview, she also extols African fashion talent and dwells on her own sartorial plans for the African continent.
In September, in Downtown Dubai, she is scheduled to open The Flower Café. Also an artist using creative expression meaningfully, she says it’s important to be “a role model of realism”.
She is also the author of The Black Book of Arabia, described as a collection of true stories from the Arab community offering a real glimpse into the lives of men and women across the Gulf Cooperation Council region.
In this interview, she also expounds on her home, Sharjah, one of the seven emirates in the UAE and the region’s educational hub. “A number of successful entrepreneurs have started in this culturally-rich emirate that’s home to 30 museums,” she concludes.
Kim Kardashian West Is Worth $900 Million After Agreeing To Sell A Stake In Her Cosmetics Firm To Coty
In what will be the second major Kardashian cashout in a year, Kim Kardashian West is selling a 20% stake in her cosmetics company KKW Beauty to beauty giant Coty COTY for $200 million. The deal—announced today—values KKW Beauty at $1 billion, making Kardashian West worth about $900 million, according to Forbes’estimates.
The acquisition, which is set to close in early 2021, will leave Kardashian West the majority owner of KKW Beauty, with an estimated 72% stake in the company, which is known for its color cosmetics like contouring creams and highlighters. Forbes estimates that her mother, Kris Jenner, owns 8% of the business. (Neither Kardashian West nor Kris Jenner have responded to a request for comment about their stakes.) According to Coty, she’ll remain responsible for creative efforts while Coty will focus on expanding product development outside the realm of color cosmetics.
Earlier this year, Kardashian West’s half-sister, Kylie Jenner, also inked a big deal with Coty, when she sold it 51% of her Kylie Cosmetics at a valuation of $1.2 billion. The deal left Jenner with a net worth of just under $900 million. Both Kylie Cosmetics and KKW Beauty are among a number of brands, including Anastasia Beverly Hills, Huda Beauty and Glossier, that have received sky-high valuations thanks to their social-media-friendly marketing.
“Kim is a true modern-day global icon,” said Coty chairman and CEO Peter Harf in a statement. “This influence, combined with Coty’s leadership and deep expertise in prestige beauty will allow us to achieve the full potential of her brands.”
The deal comes just days after Seed Beauty, which develops, manufactures and ships both KKW Beauty and Kylie Cosmetics, won a temporary injunction against KKW Beauty, hoping to prevent it from sharing trade secrets with Coty, which also owns brands like CoverGirl, Sally Hansen and Rimmel. On June 19, Seed filed a lawsuit against KKW Beauty seeking protection of its trade secrets ahead of an expected deal between Coty and KKW Beauty. The temporary order, granted on June 26, lasts until August 21 and forbids KKW Beauty from disclosing details related to the Seed-KKW relationship, including “the terms of those agreements, information about license use, marketing obligations, product launch and distribution, revenue sharing, intellectual property ownership, specifications, ingredients, formulas, plans and other information about Seed products.”
Coty has struggled in recent years, with Wall Street insisting it routinely overpays for acquisitions and has failed to keep up with contemporary beauty trends. The coronavirus pandemic has also hit the 116-year-old company hard. Since the beginning of the year, Coty’s stock price has fallen nearly 60%. The company, which had $8.6 billion in revenues in the year through June 2019, now sports a $3.3 billion market capitalization. By striking deals with companies like KKW Beauty and Kylie Cosmetics, Coty is hoping to refresh its image and appeal to younger consumers.
Kardashian West founded KKW Beauty in 2017, after successfully collaborating with Kylie Cosmetics on a set of lip kits. Like her half-sister, Kardashian West first launched online only, but later moved into Ulta stores in October 2019, helping her generate estimated revenues of $100 million last year. KKW Beauty is one of several business ventures for Kardashian West: She continues to appear on her family’s reality show, Keeping Up with the Kardashians, sells her own line of shapewear called Skims and promotes her mobile game, Kim Kardashian Hollywood. Her husband, Kanye West, recently announced a deal to sell a line of his Yeezy apparel in Gap stores.
“This is fun for me. Now I’m coming up with Kimojis and the app and all these other ideas,” Kardashian West told Forbesof her various business ventures in 2016. “I don’t see myself stopping.”
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