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ROBO-BOSSES What automation means for tomorrow’s workforce

MOBILE DOWNFALL

CASHLESS SOCIETY

The rise and fall of Vertu

What will it mean for you?

JAMES PATTERSON

CHINA’S ONE PER CENT

The writing factory

Has the crackdown worked?

Senator Excellence

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OCTOBER ISSUE 142

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WHY VERTU FAILED P26

Why the luxury mobile phone manufacturer had to go

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CONTENTS UPFRONT

MERC PICK-UP

Why the German firm has entered the pick-up market

LIVING

HOTEL

THE SHARING ECONOMY

Luxury lodgings in New Zealand

Is it sustainable in the long run?

From Barcelona to Dallas, we’ve got you covered

SCHOOL OF LIFE

A São Paulo school with a difference

WHAT TO PACK

FOOD & DRINK

MOROCCO MAGIC

A stunning Marrakesh riad with a difference

How the craft beer revolution took on the big brewers

EXHIBITION

A photography legend on display in Amsterdam

COLUMN

Tim O’Reilly on the new technology landscape

33,349 copies January - June 2017

OCTOBER ISSUE 142

CONTENTS FEATURES

ROBOT BOSSES

What future for the workforce after the rise of AI and the new generation of robots?

HERBALIFE VS THE TRADER

What happened when an activist Wall Street trader took on the controversial health food company Herbalife?

CHINA’S ONE PER CENT

How has China’s rich coped with the new rules on conspicuous consumption?

CASHLESS SOCIETY

When can we expect a cashless society and what happens when we no longer need cash?

THE JAMES PATTERSON INDUSTRY

How the American author changed the face of the publishing industry forever

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UPFRONT

OCTOBER / MOTORING

ISSUE 142

Top of the class? Mercedes-Benz chases new market share with the company’s first pickup truck. Dejan Jovavic finds out why

here used to be a time when you could buy a cheap car, a fast car, or a comfortable car. Crossover was a type of jazz and SUV stood for the Sons of Union Veterans. The new liberal world has opened up social boundaries and brought us all a click away from each other. People are fussy because they can be. Back in the day, when you didn’t have much of a choice you didn’t wonder about your options. Today, individuality thrives. Tolerance is a capitalist’s dream – so many niches to milk. We are bombarded with choice – what to watch, what to like, what to buy. The constant digital scrutiny of our lives just adds to the pressure of standing out. Marketing men around the world latched on to our weakness, our desperation for a meaning, for distinction – I mean, Pizza Hut now sells chicken wings. A talking orange rules the world. And Mercedes-Benz makes over 40 different types of cars. Yup, it’s 2017 all right. And still it’s not enough cars. In an age of individuality companies are scrambling to cater to everyone, which means a car for every personality. You can have a convertible crossover. You can

have a huge Mini. You can have an armoured Russian truck with an interior covered in eight Mississippi alligator skins. Audi will sell you everything from a city runabout to a new self-driving limo, the flagship A8. The company’s portfolio is some 40-models strong. BMW is no different, putting a coupe-SUV spin on everything and more recently turning its storied 6 Series model into a lumpy station wagon for no reason other than it didn’t exist before. When these people see a niche, they have to fill it. Racing SUVs (Lamborghini Urus), expensive cheap cars (Aston Martin Cygnet), impractical practical cars (BMW X6) – manufacturers certainly know how to celebrate our species’ diversity. Even with all those cars in its current line-up as well as a whole new EQ sub-brand arriving next year with 10 electrified cars on the cards, German brand Mercedes still finds itself missing out on crucial market share. Around the world, there are still farmers and ranchers out there who drive pickup trucks. Those pickup trucks are not Mercedes-Benzes. To satisfy every possible niche, even ridiculous ones, manufacturers have to think of answers to questions no one

UPFRONT

Mercedes came to the conclusion that the world is ready for a pickup truck with a three-pointed star on the grille

asked. Henry Ford famously said that if he’d asked customers what they wanted, they’d have replied, “Faster horses!” Mercedes, then, did its own asking and came to the conclusion that the world is ready for a pickup truck with a three-pointed silver star on the grille for the first time in the brand’s 130-year history. “The timing is right,” said Dieter Zetsche, Mercedes-Benz boss and chairman of the board of Daimler. “We believe customers are looking for pickups with car-like attributes ready for landscapes as well as cityscapes.” Zetsche, of course, has a point: in the US, the truck market yardstick,

the mid-size pickup is on a growth spurt while the rest of the industry stagnates, and Mercedes predicts the global mid-size premium pickup market to grow from 2.2 million cars to 3.2 million in 2026. “That perspective turns it into one the most attractive targets on a global scale right now,” Zetsche said. “On top the segment is undergoing a major transformation. Pickups have always been loved for hauling and doing the dirty jobs, yet more and more people in various markets also consider pickups, like SUVs, as lifestyle vehicles. They are cool, raw and stand out from the field.”

Mercedes hopes its new pickup will win over sceptical consumers

Vehicles Mercedes sold in 2016 around the world

Recently companies such as Volkswagen and Renault have also launched their own lifestyle pickups for the first time, just not in the premium sector that Mercedes now claims with Zetsche’s new X-Class. The latest addition to the range is something of the boss’ personal pet-project and Generation X will lap it up. “First, I simply love the concept of a pickup. Second, I truly dislike blank spots in our portfolio,” Zetsche said. The blank spots are X-Class shaped, and found mostly in the Southern Hemisphere where the pickup will be sold in core markets identified as Latin America, South Africa, Australia and Europe. The segment plays close to Zetsche’s interests as he has experience working for the company’s South American region in the 1980s. “I spent some of the most exciting years of my career in Brazil and Argentina, where pickups have a strong history,” he said. Zetsche is right. Forty years ago Mercedes’ Argentina importer converted 220D sedans into pickup trucks for local release in what was the company’s first serious foray into lifestyle utility. If you look at the current market, right now following two hatchbacks the Toyota Hilux pickup is the thirdbest selling car in Argentina, and pickup variants of models regularly outsell their SUV cousins. “Our Mercedes-Benz Argentina brand was actually the first to seriously approach a Mercedes

OCTOBER

pickup back in the ’70s,” said Zetsche. “The result was one of my favourite Mercedes-Benz cars of all times, with probably the best nickname ever – the Mercedes 220D pickup, better known as La Pickup… I remember seeing some of these cars out on the streets during my time in South America in the late ’80s. I guess it wasn’t exactly the toughest pickup ever from a technological point of view, and it wasn’t a great success from an economic point of view either, but many people have shared my fascination for a Mercedes pickup since that time.” In order to realise that fascination, the X-Class project was handed over to the company’s Vans division, who partnered up with Nissan to develop the Merc on the Japanese company’s vehicle architecture. Volker Mornhinweg, head of Mercedes-Benz Vans, led the project.

“The pickup segment is changing as car features become more important and private usage continues to increase,” Mornhinweg said. “We already have extensive experience developing vehicles that sit on the border of commercial and private use – with the X-Class, we close the gap in our product portfolio.” It’s a big gap. In Australia, another key X-Class market, more than 14 per cent of all light vehicles are pickups. In South Africa, where Mercedes launched the X-Class to the world’s press, one in every five vehicles on the roads is a pickup. To make aggressive inroads, it only made sense for Mercedes to look for a more experienced partner for its first foray into the segment – Nissan was chosen. The Germans are not shying from the fact the X-Class is based on the vehicle architecture of a less-than-premium Nissan Navara.

Mercedes designed its own body and developed its own suspension and powertrains for the model, including all-wheel drive and advanced driver assistance systems in the mix, but mentions of ‘badge engineering’ could hardly be avoided. Zetsche isn’t bothered, merely pragmatic: “Nissan provides over 80 years of experience in producing midsize pickups.” Starting from around $43,000, the Mercedes-Benz X-Class has the potential to open up yet another niche segment for other premium manufacturers to explore. Earlier, the utilitarian image of pickups has kept luxury brands away. When US makers like Lincoln (with the disastrously short-lived Blackwood sold for just one year, in 2002) and Cadillac (with the slow-selling Escalade EXT) tried, they failed. It was the timing – now Mercedes believes Generation X is ready.

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LUXURY CAR MARKET REBOUNDS IN GULF After a disappointing first half of the year when it came to luxury car sales, there are signs the market is recovering in the second half. With low oil prices, decreased consumer confidence and currency fluctuations, all the major brands saw sales fall. However, with Aston Martin announcing record sales last month, and other brands such as Bentley seeing rising sales, the hope among manufacturers is that the worst is over. Aston Martin said one of the factors holding back sale is a lack of financing options, but it hopes to roll out a new financial service underwritten by local banks in the coming months.

/ MOTORING

UPFRONT

How to share Emma Woollacott explores the pitfalls of the $500 billion sharing economy

here’s a fair chance that many people on this plane won’t be heading for home or for a hotel when they arrive, but will instead be off to pick up a key to a stranger’s house. Airbnb, the room-sharing website, now claims to have more listings than the top three hotel chains combined, with nearly 80 million people staying in one of its properties last year. In some cities, including Paris, San Francisco and Seattle, its hosts and guests amount to a staggering one-fifth of the local population. The company is one of the biggest success stories in the sharing economy, along with ridesharing services Uber and Lyft, but the concept has taken root far more widely than this. Brightly coloured bicycles are appearing in cities all over the world for occasional use, and ordinary people are hiring out storage, parking spaces or even their spare garden tools. In Europe, according to PwC, transactions worth $34 billion are taking place through the sharing or collaborative economy; meanwhile, in China as many as 600 million people are involved in these ventures in one way or another. “The sharing economy has matured into an established

socioeconomic trend that is fundamentally changing the way we lead our lives,” says Rob Vaughan, an economist at PwC. “From freelancing platforms altering the way we work to foodsharing platforms creating ways to connect in local communities, sharing economy businesses are enabling new economic and social interactions.” Items being shared for profit range from parking spaces to food, from beds to umbrellas, from closet space to luxury cars. The sector also includes task-based ‘gig’ jobs advertised on sites that take a cut of the proceeds. In total, these transactions are said to be worth $500 billion a year. It would be easy to conclude that the sharing economy is the future of commerce. However, many of these organisations are able to turn a profit at least partly because they fall into a regulatory blind spot – Uber, with its multiple disputes over whether drivers are employees or not, is probably the most high-profile example. And Airbnb is facing comparable problems. “Should the individual who rents a room or their whole house through Airbnb be regulated and pay the same taxes as

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A shared bike scheme in Shanghai

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The suspicion is that many sharing economy firms are more traditional than they seem those imposed upon a hotel and conform to the rules regulating the traditional hospitality industry?” ask Barry Leigh Weissman and David Cannella of law firm Carlton Fields. “And is the individual who stays at the Airbnb rental protected by the same regulations and laws as someone staying at a hotel?” The suspicion is that many so-called sharing economy businesses are actually far more traditional than they seem. In the case of Airbnb, for example, there are complaints that many rentals are in fact being offered by what British Hospitality Association CEO Ufi Ibrahim describes as “industrial in scale, professional

UPFRONT / SHARING ECONOMY

landlords operating outside UK regulations and endangering the safety of the public”. In some cities, including London and Berlin, such professional rentals have been estimated to make up as much as 40 per cent of the Airbnb total. The company, in other words, is to a large extent acting in the same way as any other rental agency, but with its clients able to offer super-short lets without the constraints normally placed on hoteliers. Increasingly, authorities are attempting to impose more regulation on such room-sharing sites. Many cities are placing strict time limits on short-term rentals; in London, for example, properties can’t be let for more than 90 days a year, while New Yorkers are banned from renting out entire apartments for less than 30 days. The loopholes are starting to close. And room rentals aren’t the only example of so-called sharing models that are, in practice,

40%

The percentage of professional rentals in cities such as London and Berlin on Airbnb

standard commercial businesses in all but name. Most bikesharing schemes don’t actually involve people renting out their own bikes; similarly, most ‘petsharing’ operations are simply paid pet-sitters. Meanwhile, the so-called gig economy has also gradually started to fall under the sharing umbrella – and, again, it’s highly debatable as to whether the term is appropriate. In the most extreme manifestation, many Uber drivers are said to be full-time employees in all but name, giving rise to the company’s much-publicised woes over staff pay and benefits. However, even when a gig worker has numerous employers, similar concerns remain. How, after all, does a freelancer ‘sharing’ their skills through a site such as TaskRabbit, Mechanical Turk and Upwork differ from any other worker? In practice, it could be argued that these sites are no more than temping agencies – indeed, that they are temping

An Airbnb listing

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UPFRONT / SHARING ECONOMY

“Trust will continue to be the key sharing economy issue in 2017, requiring new forms of self-regulation” agencies that don’t even do the job of matching workers to employers themselves. A report from McKinsey late last year found that a staggering 162 million people are working in the gig economy in the US and the EU – more than 20 per cent of the workforce. Many report great satisfaction with this model, whether it means making most of their money this way or simply supplementing their income. However, many others feel they have little choice. Around the world, these workers have far less in the way of employment protection than their traditionally employed counterparts – although this may be starting to change. In Australia, there are moves to reclassify ‘gig’

workers as employees rather than as independent contractors. In the UK, a recent government review called for a new category of worker, the ‘dependent contractor’. “Policymakers will need to show a bold appetite to try new policy approaches and foster a spirit of collaboration between all stakeholders to find the right balance between protection and flexibility,” says Vaughan. “The interaction between the sharing economy and the tax system is also set to move into the spotlight, as the implications of legal cases become clearer.” Other regulatory issues for sharing economy companies centre around legal protections for customers. This is a highprofile issue in China right

162m

Number of people working in the gig economy in the US and the UK

New York’s Citi Bike bike share scheme

now, with several bike-sharing operators having failed to return deposits to users. Elsewhere, questions have been raised over everything from data protection issues to equality legislation, as well as legal liability when a gig worker causes harm. “Trust will continue to be the key sharing economy issue in 2017,” says Vaughan. “To tackle this, we expect platforms to implement proactive new forms of self-regulation this year.” It remains to be seen whether the sharing economy continues its rapid growth once legislation around the world has caught up with the new business models. A recent European Commission report recommends that countries should consider establishing minimum thresholds under which a service would be considered a ‘non-professional peer-to-peer activity’ – meaning that larger enterprises would have higher regulatory hurdles to clear. However, according to Vaughan, cooperation – fittingly – may be the key to ensuring that sharing economy businesses can flourish without sidestepping regulations. “It is noticeable how the review and rating systems often embedded in peer-to-peer platforms have been cited by the Commission as having the potential to mitigate the need for regulation in some instances,” he says. “In return, platforms can look to build on this olive branch, working closely with public bodies to make it easier for users to understand their legal obligations. All of these factors should make it easier to avoid absolute bans, inspiring engagement with, rather than shutting the door on sharing economy services.”

AIRBNB FOUNDER GIVES START-UP ADVICE Airbnb founder Brian Chesky has warned other entrepreneurs to “raise as little money as possible” when starting out on their journey. “If you develop a scrappy culture,” Chesky says, “the scrappy culture requires you to build more novel solutions, use fewer out-of-the-box software things and you end up just building a scrappy, more frugal, more startup-like environment.” He told the Masters of Scale podcast host Reid Hoffman that he believes it’s important to wait before pitching investors. “Wait longer before you meet investors,” Chesky said, “because you’re going to spend an enormous amount of time getting rejected.”

UPFRONT

Vertu’s demise Charlie Mitchell examines the rise and fall of the luxury handset maker

ertu was established in 1998 by Nokia to produce premium mobile phones for the ultra-wealthy. Its handsets – precision engineered and handmade with superior materials – ranged from $6,000 to well over $60,000. “Vertu was a heady mix of technology, design and telephony services,” says Mark Izatt, who oversaw global marketing for the company. Nineteen years and three owners later, in July of this year, Vertu wound up and entered liquidation. For nearly two decades, Vertu phones were made in a nondescript facility in rural Hampshire, in southern England. As liquidators pick at the company’s remains, the factory floor that once hummed with the labour of artisans lies empty. The company was smothered by years of mismanagement, fierce competition from smartphone manufacturers and high production costs. In the end, impeccable design failed to compensate for the limited functionality of its phones. But with more than 1,000 employees by 2012 and around 500,000 phones sold, Vertu has been the most successful attempt to date to

capture the upper echelons of the mobile phone market. And for its many admirers, Vertu’s rise and fall is a cautionary tale. “Vertu was created when Nokia was in its heyday, with a 40 per cent market share around the world,” says Ben Wood, chief of research at CCS Insight, a market intelligence firm. The intention of its designers was to produce phones in the vein of Swiss watches. “If you had nice cars and nice watches, a Vertu phone was a nice companion product,” said Wood. Craftsmen worked with ceramic and the skin of alligators and ostriches. Rubies accentuated the keys. Vertu’s scratchproof screens were made with Hampshire-grown sapphire crystals. (Despite Apple’s best efforts, Vertu remains the only manufacturer to achieve this.) At $50,000, the Signature Clous de Paris phone featured black sapphire keys and 18 carat red gold. Other handsets were designed in partnership with Ferrari and Bentley. A private commission, Vertu’s most expensive phone sold for around $388,000. Nevertheless, the company prioritised quality, authenticity and service, rather than bling. With a dedicated concierge service, Vertu customers could book hotels,

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buy tickets and access private members’ clubs around the world. Pre-programmed ring tones were recorded by the London Symphony Orchestra. “The intention was to create something better, not just more expensive,” said Mark Hill, who spent a decade at Vertu in various senior roles. Vertu emerged from the vision of former Nokia design chief Frank Nuovo. It was over breakfast in 1997 with eventual co-founder Peter Ashall in Santa Monica, California, that the company was born. Shortly thereafter, Vertu was funded by Nokia for the first round of development, and officially launched in Paris in 2002. Immediately the brand was disparaged for its extravagant prices.

“At first it was a horrible struggle. It took until year five to become profitable” “At first it was a horrible struggle,” says Nuovo. “It was a completely new market and people were used to subsidised phones.” Vertu phones were sold in just five shops globally on its launch, so customers proved elusive. Later, sales accelerated when Vertu partnered with luxury department stores like Harrods and Galeries Lafayette. “It took until year five to become profitable,” said Nuovo. In those early years, Vertu experienced solid year-on-year growth, as the brand established itself as a status symbol in the rudimentary mobile phone

UPFRONT

market. An exclusive customer base comprised footballers and celebrities. Record producer Quincy Jones and musician Seal both owned Vertu handsets. Internationally, the brand had started to take off, with demand strengthening in Russia, Brazil, China and the Middle East. Remarkably, the small Chinese city of Wenzhou had two Vertu stores. As Nokia dwindled, optimism was high among Vertu’s loyal workforce. Then, in 2007, Apple released the iPhone. Still under Nokia’s ownership, Vertu was wedded to Symbian, the somewhat antiquated mobile operating system of its Finnish parent. Moreover in 2007, the functionality of Vertu handsets was limited to calls and texts. “There was analysis paralysis as they wrestled with Nokia, who insisted they use Symbian,” said Wood. As the mobile phone market shifted and the smartphone established dominance, Vertu was torpid. “The failure of Nokia and its operating system became the failure of Vertu,” said Nuovo. In 2012, with Nokia walking wounded, the business was sold for around €200 million to EQT, a Swedish private equity group. Dismayed, Frank Nuovo left the company he had created. Though fans of the brand, the new owners had little experience with small companies. “What was needed was an increase in the top line and in the customer base,” said Hill. “That’s a very different philosophy from going in and making the business leaner.” By the time Vertu installed Android technology in 2013, it was already struggling. Two years later, the business changed hands again when it was bought by the Chinese firm

“BMW owns Rolls-Royce. Volkswagen owns Bentley… you need a substantial company behind you to keep up with the technology” Godin Holdings. After failing to file its accounts in 2015, Vertu was rumoured to be on the verge of administration. Its most recent accounts, from 2014, showed losses of $69 million on sales of $142 million. PwC, which was auditing the firm, resigned in April 2016. Seven months later some 200 workers were laid off as part

of a major restructuring. In March 2017, the business was sold for $65 million to Baferton Ltd, a Cyprus-registered vehicle under the ownership of Murat Hakan Uzan. A Parisbased Turkish exile – once sued by US president Donald Trump – Uzan acquired an accounting deficit of $166 million. After

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STILL AIMING HIGH Despite the demise of Vertu, there are other luxury mobile phone manufacturers, including Goldvish, which has a number of models on the market for eye-watering prices. The Eclipse Diamond Heaven costs $39,000 and is made of alligator leather and features 360 diamonds set in stainless steel. It has 64GB of storage and comes with the latest Android OS. This is a phone to show off, and so don’t expect to get any questions on its performance, not when its looks are so striking. For those who want to spend a bit less, Goldvish’s models start at around $6,000.

the manufacturing arm entered administration, his plan to buy back the business for $2.4 million failed. Vertu entered liquidation in July with $596,000 of unpaid wages and a $672,000 hole in the pension pot. (A subsequent auction of Vertu assets in August allowed liquidators to cover unpaid wages.) Total debts stood at $52 million. At Vertu’s core lay a conflict between luxury and technology; or longevity and regeneration. Under Nokia, handsets were technologically limited. After

2012, Vertu became smartphoneobsessed, trying to compete with tech giants Samsung and Apple. “They were never going to win that race,” said Izatt. “BMW owns Rolls-Royce. Volkswagen owns Bentley. Fiat owns Ferrari,” said Nuovo. “You need a substantial company behind you to keep up with the technology.” Also, manufacturing, development and marketing are exorbitant if you want to be seen as a truly luxury brand. The company’s decline in China – one of its largest markets

– sealed its fate. Sales dried up in the country after 2014, following a government clampdown on bribery. Vertu phones were a status symbol in China, where they had greased palms for years. In spite of its demise, Vertu leaves an impressive legacy. “In the luxury smartphone space, Vertu was the only one that established a critical mass and a brand,” said Wood. Its emphasis on high-quality materials and techniques is recognisable today in the marketing strategies of Apple, which hired two sapphire specialists and marketing guru Bob Borchers from Vertu. With around 1.5 billion smartphones sold annually, various companies including Mobiado and Goldvish are making premium handsets. In May 2016 amid much fanfare, Israeli firm Sirin Labs launched the $16,000 Solarin phone, which features militarygrade cybersecurity. But sales have been lacklustre. Sirin is still determined to carve out a market, despite laying off a third of its workforce in March. “We have an ultra-niche product targeted to a unique audience base,” said CMO Nimrod May. Perhaps Sirin and others can learn from Vertu’s demise. “We are not happy to see a colleague decline,” said May. Uzan still owns the brand, technology and design licences, and could potentially resurrect Vertu. Meanwhile, nostalgic former employees remain wedded to their vision and embittered by years of bling-shaming. “Vertu was about bringing together the old world and the new world and doing it with pride,” said Nuovo. “It was never about diamonds.”

UPFRONT

The School of Life

Lauren Razavi discovers a Brazilian school with a difference

decade ago, Brazil was one of the fastest-growing economies on the planet. Now, the markets that fuelled this economic surge have collapsed, leaving the country mired in its worst recession since records began. The 2014 Fifa World Cup and the Rio 2016 Olympic Games celebrations strapped a carnival mask of prosperity over Brazil’s troubles. But, despite the festivities, unemployment has increased 9.2 per cent since 2012, leaving 30 million people jobless. One pioneering company

believes the solution to Brazil’s problems lies in a fundamental shift towards how we understand the world and ourselves. The School of Life (TSOL) is a multimedia learning provider dedicated to providing adult students with an emotion-centric form of education designed to exercise and expand the mind. Founded in London by philosopher and author Alain de Botton back in 2008, the school has quickly gained popularity by distancing itself from traditional educational institutions and considering the big existential questions.

Above left: Alain De Botton Above: The School of Life in São Paulo

Four years ago, having catered to over 100,000 customers since its conception, the company established an outpost in one of the largest urban sprawls on Earth, the bustling megacity of São Paulo, Brazil. “After Alain started TSOL in London, four other nationalities consistently showed interest by flying to London to attend classes,” explains Jackie de Botton, cousin to the school’s founder and executive director

OCTOBER / THE BUSINESS

“We instruct in purpose, diplomacy, empathy and resilience in order to work better and to achieve emotional clarity” of TSOL Brazil. “They were the Turkish, Australians, Dutch and Brazilians. There was a natural call from these countries, and TSOL answered.” TSOL reacted decisively to this demand, adding a marketplace presence in each

nation between 2013 and 2014. Now, the company seeks to obtain a worldwide influence, boasting locations in 12 global hubs spanning Taipei to Istanbul. The school teaches that lives are governed by emotions and, as with any aspect of the human

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mind, emotions can be honed to improve the professional and personal spheres. The core classroom curriculum consists of a collection of over thirty regular classes on the central issues they believe most heavily influence relationships and work. Covering subjects such as sociability, career potential and even the meaning of life, TSOL’s programmes adopt the forms of five-day intensive courses, regular seminars and one-off workshops. These sessions are led by cultural thinkers such as the Australian author of Carpe Diem Regained, Roman Krznaric, and British BBC radio broadcaster and journalist David Baker. “We’re in in the business of fixing people’s minds,” explains de Botton. “Through our array of courses, we instruct in purpose, diplomacy, empathy and resilience in order to work better and to achieve emotional clarity.” Whilst TSOL’s paid events are the priority, they are also determined to touch the lives of as many people as possible. The school also offers free resources such as a YouTube channel with more than 2.7 million subscribers, and an app that invites users to connect and share ideas. TSOL’s project is certainly ambitious, and the Brazilian arm of the enterprise is a symbol of that drive to expand. But Brazil requires more than individual selfimprovement to heal its pains. The uncertain state of Brazil is a panorama of social and political factors, and high-level corruption is ever-present. Between the indictment of former president Dilma Rousseff and the current allegations of accepting bribes levelled against her successor

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UPFRONT / THE BUSINESS

“It’s about finding there are a thousand different ways to live, and you have to live up to your best”

Michel Temer, ripples of scandal permeate Brazil’s business community. In order to counter the economic fragility, TSOL Brazil looks to enhance emotional intelligence in the corporate arena. The school’s brand consultancy workshops have helped European clients such as Allianz and Lloyds Bank innovate to improve their relationships with customers. In Brazil, TSOL aspires to replicate this success, bringing their philosophy of simple creativity to a shaken economy. “There’s something called ‘The Brazilian Cost’, which is the cost of bureaucracy that we’ve become accustomed to. Brazilian businesses are surrounded by turbulence with the ongoing political turmoil and it just makes everything even worse,” explains de Botton. “But we also thrive on conflict. We are implementing 20 new corporate classes, addressing

20 core areas of emotional intelligence in a corporate setting.” Staff-development holds the most potential to make a difference in corporate Brazil. Suggesting a variety of multi-class ‘journeys’ in resourcefulness, decisiveness and more, the two-hour sessions combine to sharpen staff’s emotional skills to make them more confident, capable and efficient. Sadly, not all of Brazil’s problems are white-collar. The second-greatest consumer of cocaine in the world, Brazil is plagued by gang warfare. The persistent cartel violence is the reason the country ranks as the 13th most homicidal in the world. For de Botton and TSOL, teaching people how to handle death and loss effectively is among the most crucial areas of emotional education in Brazil. TSOL’s classes on confronting mortality take cues from a host

Branches The School of Life plans to open worldwide

of philosophers, theologians and artists to interrogate the meaning of death and bereavement. De Botton claims that through conversation and support about acknowledging the impermanence of oneself and loved ones, the sessions ultimately intend to enrich a sense of life. “We put a frame around this eventuality. Sometimes what we do is just console, because for the anxiety of mortality it’s not about finding a solution. It’s about understanding that there are a thousand different ways to live, and you have to live up to your best,” says de Botton.

OCTOBER ISSUE 142

UPFRONT / THE BUSINESS

Our cultural model needs a little more European influence and Europeans could use some of the joie de vivre of Brazil too

The country-specific focus on death in Brazil highlights a further challenge that TSOL faces. Its identity is built from the descendants of slavery, indigenous peoples and European immigrants. The unique cultural medley of race and religion that inspires Brazil’s world-famous carnivals provides a vibrant new audience

for TSOL’s teachings. As the first South American country the school has established a base in, Brazil is a test of how culturally transferable their lessons are. Each outpost that the school has created overseas from its London birthplace has been a gamble to some extent or another. The vibrant personality

Brazil is a test of how culturally transferable TSOL’s lessons are

of Brazil, though, could be the sharpest contrast to that of the of TSOL’s headquarters in the UK’s capital that the organisation has had to tackle. The key to success lies in adopting a measured flexibility that prioritises the messages of the lessons, whilst trying to incorporate these ideas into Brazilian culture. TSOL’s work is supposed to be both informative and flexible, and the team hopes to learn some lessons about life as they teach. “The core curriculum is standardised across our locations, which can be challenging because Brazil has such a rich and unique culture,” says de Botton. “We have the word ‘jeitinho’, meaning ‘a little way’. And we find our little way to be flexible. Our cultural model needs a little more European influence and Europeans could use some of the joie de vivre of Brazil too.” Approaching their fourth anniversary in Sao Paulo, TSOL’s Brazilian team is excited about what the future holds. Expansion into other cities with larger-scale corporate courses is the big goal for year five. Times are tough for the citizens of the samba nation. But Brazil’s internal adversities strengthen the resolve of those who want change for the better, and TSOL endeavours to provide the passion and the tools to make it so.

OCTOBER UPFRONT / CLASSIC READ

ISSUE 142

The 22 Immutable Laws of Marketing By Al Ries and Jack Trout

The book’s ‘laws’ have stood the test of time because they are, by and large, completely true

irst published in 1994, this slim book has turned into something of a classic. Broken up into 22 ‘laws’, it deals with the thorny subject of marketing by taking on some myths and establishing some rules that the authors believe will always take precedence. For example, the Law of Leadership: the authors point out that if you can’t be the number one in a category, you should try to set up a new category you can be first in. They give the example of the first person to fly the Atlantic solo. Everyone knows

that Charles Lindbergh was first, but the second person to do it, Bert Hinkler, is almost completely forgotten. If you are facing a crowded marketplace, it’s almost inevitable you will end up as Bert Hinkler, as the Charles Lindbergh position has already been taken. You can, however, create a new category to lead in, as Amelia Earhart did when she became the first woman to cross the Atlantic solo. Everyone knows her name, despite her being the third person to make the journey. She was the first woman to cross, a new category that ensured her name

lived on. The book has 22 of these pithy laws, which, if they weren’t so true, could be seen as rather trite. Yet, the chapters all make sense, which is one of the reasons the book has stood the test of time so well. Another law is titled the Law of Perception, which states that marketing is not about products but about perception. This ties back to the idea that ‘reality’ doesn’t exist, and is just a perception of reality that we create in our minds. For example, Honda at one stage was the leading Japanese car manufacturer in the US, but only third in Japan. There, it was perceived as a manufacturer of motorcycles. Another law is the Law of the Ladder. This means that the second company in a market should use a different strategy to the market leader. The authors give the example of Avis, the car hire company. They were number two in the US market, and their ad campaign “finest rent-a-cars’ didn’t work. It was only when they switched to “Avis is only No.2 in rent-a-cars. So why go with us? We try harder.” Overall, this is a book for those who want an overview of marketing strategy.

UPFRONT

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OCTOBER / PROPERTY

ISSUE 142

OCTOBER ISSUE 142

UPFRONT / SPEND

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SINGAPORE RETAILERS FEEL THE ONLINE PINCH More and more Singaporeans are shopping online – usually on Chinese websites – and the country’s department stores are feeling the effect. Some of the world’s biggest e-commerce players have targeted the country, due to its location as a gateway to the lucrative Asean market and the buying power of its affluent population. With mall rents falling and vacancy rates rising, it’s unclear how the city’s retailers will fight back against the online push.

From the moment we first welcomed patients to our London hospital in 1840, to the opening of our clinics here in Dubai and Abu Dhabi, one thing has remained consistent, and that is the importance of caring for our patients and their families, not just medically, but with kindness and respect. Find out more about how we can help you.

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ROBO-BOSSES: THE FUTURE OF THE WORKFORCE? Jesse Onslow Norton examines how AI will affect tomorrowâ€™s workers

ROBO-BOSSES

magine sitting down to review your team’s performance over the past month. You’re the only person at the meeting room table. There are no department managers sipping nervously from glasses. Nor are there piles of printed paperwork ready to scrutinise and discuss. Instead, there’s just a small tablet computer in front of you. Based on the rules and data points of your choosing, an app on the tablet offers easy-to-digest insights and visualisations that summarise performance, progress and potential – from month to month, from week to week, from day to day, or even in real-time as you’re viewing the information. In the style of a hungry young business analyst, the same app recommends opportunities for cost savings, higher efficiency and new business development. Without comment on individual character, personal circumstances or emotional relationships, it’s able to complete a highly accurate and extremely detailed review of company and staff performance, with the added bonus of features like real-time insights and wider situational context. Welcome to the era of robo-bosses. The workplace of tomorrow will look a lot different than it does today. While much of the current hype is centred on the Internet of Things’ potential to revolutionise everything from office buildings to business travel, the impact of smart technologies goes well beyond infrastructure and transportation. Complex and flexible algorithms are fast developing the capability to take care of people management and, in many cases, they’re already able to do it better than humans can. Everybody knows the line that robots are coming for their jobs by now, but the idea that those same machines will soon manage and monitor entire teams and departments has so far been subject to much less discussion. According to a report by Gartner, however, more than three million workers across the globe will have robot supervisors by 2018. Machines powered by artificial intelligence (AI) and requiring minimal human input are now capable of taking over responsibilities traditionally reserved for the role of manager, such as analysing performance data, making HR recommendations and identifying organisational efficiencies.

ROBO-BOSSES

The growth of labour saving machines in the 19th century allowed workers to specialise in more skilled trades

“We’re a long way from formally reporting to a robo-boss. However, there’s some really powerful technology available now that can augment management decision making,” says Rob McCargow, AI programme leader at PwC. “Automation allows managers access to huge amounts of data about workforce performance. AI presents a clear competitive advantage to improve the way you can drive competitiveness and productivity.” It may seem like the idea of robo-bosses has appeared out of nowhere, but the techniques underlying automation have been evolving for centuries. The power of technology to streamline industrial processes has impacted all industries, but nowhere has it been as transformative as it has with agriculture and farming practices. In 1790, farming was a laborious process and economies needed enormous amounts of manual labour just to produce enough food to sustain

An employee at the Fraunhofer Institute for machine tools and forming technology adjusts a robotic arm

Rob McCargow, AI programme leader at PwC

themselves: 90 per cent of the total US labour force was dedicated to the cultivation and harvest of food crops. But the industrial revolution changed everything. Today, modern farming practices result in a key industry that once dominated the global economy accounting for just a tiny fraction of labour productivity. And it’s not just agriculture that has been radically transformed by technology. The rapid growth of labour-saving machines throughout the 19th century reduced the need for workers to commit themselves to low-value work such as sewing and basket weaving, and enabled them to specialise in more skilled occupations. The industrial revolution that followed this economic shift ushered in the modern era. While this period is widely regarded as one of the great achievements in human history so far, the full extent of its transformative power has not yet been felt. Research from Oxford University suggests that the fourth industrial revolution is forthcoming, and that 47 per cent of the US workforce will be taken over by robots before the end of the year 2020. When most people think of automation, they’re quick to imagine conveyor belts carrying products through mechanised assembly lines. Soft drink labels being wrapped around plastic bottles, piles of denim being stitched into jeans or computer components being soldered together by robotic arms – these automated processes dominated the imagination of the business community throughout the 20th century. But the next wave of automation will be about much more than streamlining physical processes. Just as steam engines and electric motors replaced the economic need for human muscle power, AI, big data and cognitive computing are beginning to replace the need for human brain power. One of the greatest barriers to the widespread adoption of assembly line mech-

ROBO-BOSSES

anisation was that it was only really affordable at scale. The procedure for manufacturing goods had to be fine-tuned by highly qualified engineers and each step had to be infinitely reproducible, with no potential for variation in the process. What makes the next generation of automation processes different from previous ones is that machines are now able to teach themselves how to do the jobs theyâ€™re required to perform. Rather than pre-programming machines to operate on a single repeatable task within a highly controlled environment, sensor technology is now being used to enable robots to perform tasks dynamically based on real-time information. This means they can be reprogrammed to perform different processes without the need to invest in additional hardware or machinery. Outside of factory environments, computers are allowing entire industries to reduce operation-

al costs drastically by replacing human staff with software systems. With more than 300,000 self-service checkouts already operating in supermarkets globally, the food retail sector has been an early adopter of software automation. The world has seen a decrease in the demand for human cashiers as a result. A report by Gartner estimates that 45 per cent of the fastest-growing companies by 2018 will have fewer employees than smart machines. Self-driving cars present another great success of 21st century automation so far. According to 2014 census data, more than four million US workers are employed as some form of driver, whether thatâ€™s driving taxis around cities, trucks across highways or casual work through platforms like Uber and Lyft. In parts of southern states like Texas, the transportation industry accounts for around nine per cent of the total workforce. With self-driving technology rapidly improving and

A life sized humanoid robot at the RoboThespian stand in Hanover, Germany

Northstar Venturesâ€™ Richard Charmley, who works with disruptive tech startups

ROBO-BOSSES

being rolled out by multiple companies, the question is not whether human drivers will be replaced, but instead, how soon it will become economically attractive for companies to adopt the technology and operate fully automated fleets. As more and more countries transitioned from manufacturing economies to knowledge economies, office workers and customer service roles came to dominate the labour force. Today, it is precisely these occupations that are most at risk from software-enabled automation. Existing technologies such as voice assistant Amazon Alexa may not seem as smart as humans, but they’re invariably much, much cheaper for companies to install and maintain, and they’re learning from interactions and refining their abilities all the time. But automation of this kind is creating new, previously unimaginable jobs too. Over the past couple of decades, a new type of occupation has emerged that is focused on making humans obsolete in the workforce. Automation engineers are computer scientists that identify ways to replace jobs with software bots. Until the recent rise of machine learning techniques, most automation has been limited to replacing low-skilled workers. But companies that operate at scale are far more interested in automating high-skilled positions that disproportionately inflate their wage budgets. As a result, banks and hedge funds are interested in replacing wealth and investment professionals with robo-advisors that can crunch enormous volumes of market data without errors, omissions or miscalculations. According to Deloitte, robo-advisors will be responsible for managing between $2.2 and $3.7 trillion in assets by 2020. By 2025, that figure is expected to rise to $16 trillion. The rise of high-frequency trading and automated asset management demonstrates just how comprehensively machines can outcompete human operators and make them redundant in highly technical fields. Productivity has always been driven by technologies that reduce the need for human labour. Throughout the evolution of automation technologies, machines have been taught to perform tasks that make the lives of their human operators easier or better. First it was manual tasks, then menial jobs, and now sophisticated mental tasks like jug-

gling stock data and analysing complex chemical interactions are being taken over by the robots. Perhaps quite naturally, the next frontier in the evolution of automation will be when machines stop doing our work and instead start assigning tasks to us. In contrast to existing occupational automation – which mostly involves robots taking over low-skilled or manual jobs – robo-bosses take on a supervisory role. Because these robots manage human employees rather than human employees managing them, they’re set to revolutionise the way businesses organise their workforces. “Automated management systems are being adopted by companies looking to increase efficiency and accountability. Startup tech companies are usually the first to adopt a solution,” says Richard Charnley, investment manager at Northstar Ventures, a venture capital firm that works with disruptive technology startups. “Manufacturing – especially automotive because this sector already works with real robots – and financial services – given their regulatory focus – will probably invest the most.” The digital platforms that make up the so-called “gig economy” have been early adopters in this area, meaning that many of these workers are already monitored by algorithms and are therefore accountable to robo-bosses. Companies like Uber, Lyft and Deliveroo use algorithms to assign deliveries. A central server decides which workers get which jobs, monitors their behaviour, measures their performance by harvesting feedback from users, and crowdsources traffic data, GPS and environmental information to make the network run more effectively. Researchers at the Carnegie Mellon University Human-Computer Interaction Institute, who coined the term “algorithmic management” in 2016, argue that robo-bosses are the key innovation that makes the gig economy possible. These companies do not employ the people that work for them directly but instead rely on a large network of independent contractors for their systems to function. This can make it difficult to keep track of the performance of individual workers while also guaranteeing a consistent service, especially for companies that want to expand worldwide.

Automation engineers identify ways to replace existing jobs with software bots

ROBO-BOSSES

For these companies, robo-bosses have notable advantages over human managers. They drive down overhead costs by cutting the need for a middle management layer, and they can supervise large groups of employees more efficiently than a human manager is able to. Performance review is an important aspect of effective management, and robo-bosses can easily monitor employees in real time. They can quickly process large quantities of data to arrive at a more holistic overview of business performance, using this overview understanding to optimise and improve workflow. “Automation will allow management teams to concentrate on more important things like sales and hiring. This will help them disrupt markets and create competitive advantage,” explains Charmley. “Their margins will go up because they’re working more efficiently and they can reach decisions faster because they have better access to data.” In more traditional work environments where employees are used to having a close professional relationship with a human boss, the lack of emotion attached to a robo-boss may put some people off – at least initially. But research by the University of Manitoba found that 46 per cent

A dual-arm robot holds a smartphone and a torch at the Swiss automation group ABB booth at a trade fair in Hamburg

The best performance is achieved when humans and AI work together

of people obeyed the instructions of a real robot when it pushed them to complete a boring task. The team discovered that participants argued with the robot as if it were a person, suggesting an inherent acceptance of robots as authority figures. Robo-bosses have no social relationship with the people they manage, but their inability to experience bias or favouritism can actually be beneficial to employees. The lack of human prejudice allows robo-bosses to solely assess employees based on their performance, effectively eliminating the possibility of unfair judgments based on personal prejudice. “An AI system might be helpful in overcoming mourning, depression or anxieties in theory, but in practice people will always crave human attention and want human connections,” says Tomas Chamorro-Premuzic, an organisational psychologist and professor of business psychology at University College London. “People know that machines are just trying to imitate or emulate human emotion, so perceptions of sincerity can still be a barrier.” The development of robo-bosses highlights a key tension in traditional management structures. Heading up teams often necessitates combining strong leadership skills with the ability to apply proven management techniques. Currently, robobosses can achieve the latter, but the strategic vision and interpersonal skills required to be an effective leader are still some way off being replicated by machines. Should robots learn to emulate these traits, it won’t just be managers that are out of a job. Following the string of recent public scandals surrounding former Uber CEO Travis Kalanick, shareholders may be forgiven for wondering whether boards of directors could also benefit from being automated out of existence. “It’s unlikely that human directors will be removed completely from boards and replaced by AI in the near term,” says Chamorro-Premuzic. “Instead, boards will operate more efficiently and effectively if they start using AI to inform their decisions. In most areas, the best performance is achieved when humans and AI work together. This is no different.” The story of human progress is built upon alwaysadvancing labour-saving technologies. As tools have been improved to automatically perform more and more human jobs, our relationship with machines has also evolved. The bad news is that having a senior position in a company won’t necessarily protect you from being replaced by a robot. The good news is that it won’t be anything personal.

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HERBALIFE VERSUS THE WALL STREET TRADER Lauren Razavi examines the opportunities and pitfalls of activist investing

n December 20, 2012, activ- two per cent stake in Nestlé and demanded radical ist investor Bill Ackman reforms, including the sale of Nestle’s 23 per cent announced an audacious stake in L’Oreal. In an open letter to shareholders he $ 1 billion dollar bet against attacked what he referred to as the company’s “staid Herbalife. Ackman claimed culture and tendency towards incrementalism”. the global nutrition brand was Critics argue that this confrontational style, a pyramid scheme where the only way for distrib- combined with attempts to influence businessutors to generate a proper income was to recruit es at management level, makes activist investors as many new distributors as possible. By publicly dangerous. Dr Stefan Petry, assistant professor of airing his concerns about the company’s business finance at the University of Manchester, however, model he hoped to destroy its reputation and prof- argues that activist investors can have a positive it from short selling shares through the downturn. influence on business performance. This is what’s known as activist investing and it “Activist investors want the companies they tardoesn’t always go according to plan. get to pay out the cash they’re holding onto as a Activist investors are a specific breed of stock dividend to the shareholders,” he says. “When market traders who adopt minority stakes in companies have low leverage, they tend to have an companies in order to influence management easier life because they don’t have to make interest decisions. Although the word “activism” sug- payments. Activist investors put pressure on mangests concerns about ethics or sustainability, these agement to work harder by increasing leverage.” investors are not usually motivated Companies with low levels of debt by a desire to build a better world. and high volumes of cash are particInstead, they aim to take a less ularly attractive to activist investors passive role in improving the perforbecause they tend to make worse mance of the companies they invest investment decisions. Activist invesin and maximise shareholder paytors challenge bad management outs in the process. decisions and can force complaHedge fund owners who are assocent companies to shift their focus ciated with activist investing often towards innovative new paths. take to the media to express their “The fact that we now observe disagreement with their target commore activism could be a sign that pany’s management style. One such companies have been doing very Bill Ackman launched an investor is Daniel Loeb, a notoriously well over the past five to seven audacious $1 billion bet harsh critic of company management years,” Petry explains. “Now they against Herbalife, a move that ultimately cost him dear structures. He recently bought a have a lot of cash in their bank

HERBALIFE

account and the activists see more potential to make companies pay out more of their money.” In 2012, Ackman launched an audacious $50 million PR campaign against Herbalife. Speaking at soldout public events he made bold predictions that its stock price would hit zero within just a couple of years. After initially dropping more than 20 points in just a few days, the price of Herbalife’s stocks now sits at roughly the same price before Ackman initiated his media battle against the company. So, what went wrong? Much of Ackman’s campaigned heavily relied on an ongoing Federal Trade Commission (FTC) investigation proving the company was a pyramid scheme as he claimed. Unfortunately for him, after many delays and a media circus following the rulings, the FTC report discredited the idea and concluded that Herbalife wasn’t a pyramid scheme after all. The same day, the company’s share price rose by 10 per cent and the company began working with the FTC to reform its business model and quash any further allegations of unlawfulness. Following FTC-enforced reforms in 2016, at least 80 per cent of Herbalife’s net sales now come from product sales rather than distributor

The Federal Trade Commission building in Washington, DC

“Ethical investing is really about broadening the lens and looking at chances the market may have missed”

recruitment. The company has paid $200 million in settlements to distributors who lost money through their involvement in the business. As of August 2017, the company was considering going private or buying back its own shares, a move that could destroy Ackman’s short position and could increase the $115 million loss he has already suffered. The failure of Ackman’s Herbalife campaign does not mark the end of activist investing because when it works, it pays. For example, Ackman previously raised $670 million for Wendy’s investors by forcing the company to sell off its unprofitable Tim Hortons chain. And other activist investors such as Carl Icahn and Daniel Loeb continue to make their mark on the finance sector. In 2015, Kraft Heinz reported a 136 per cent jump in sales after Loeb disclosed his stake in the company. However, unsuccessful activist investment campaigns show that it is a risky strategy that does not always yield the expected results. In 2016, Ackman purchased a 10 per cent stake in fast food chain Chipotle. In June 2017, after a series of food safety scandals, Chipotle’s stock prices dived suddenly by 10 per cent. Cases such as the Chipotle affair

HERBALIFE

prove that unforeseen circumstances can cause activist investment campaigns to go haywire, with expected profits evaporating. Some think that activist investing still has a role to play if it is transformed into ethical or sustainable investing. Although activist investors are not normally known for their interest in social justice, and prefer to concentrate on maximising shareholder profits, some activist investors believe that profit and ethics can go hand in hand. Firms such as Arjuna Capital include sustainability and diversity as key elements of their investment strategy. After taking shares in seven of the largest tech companies in 2015, including Microsoft and Apple, Arjuna submitted a shareholder proposal to encourage them to publish their gender pay gap records and start working towards pay equity. Five companies agreed to the proposal even before shareholders had voted on it. “We view environmental sustainability and social equity as an intrinsic part of economic progress,” explains Natasha Lamb, portfolio manager at Arjuna. “We don’t believe sustainability, economic progress and stock performance are mutually exclusive. Rather, we see them as mutually reinforcing.” Ethical investor s believe in changing the investment industry from within, but targeted companies often need convincing before they change their ways. Arjuna’s call on eBay to publish and fix their gender pay gap was initially rejected but later accepted with a 51 per cent shareholder vote. By then other tech companies Arjuna owned shares in, such as Adobe, had adopted the proposal and were supporting Arjuna’s calls for change. “When we make the case that companies should examine their gender pay gap, be transparent about it and try to close it, we tell them it’s in their self-interest to do so,” Lamb says. “Those that do are going to attract top talent and build diverse teams, and that will put them at a competitive advantage versus their peers.” Lamb thinks that sustainable or ethical investing will eventually become the new norm because it has been proven to improve business performance and stakeholder payouts. McKinsey’s 2015 Diversity Matters report found that company earnings rise 0.8 per cent for every 10 per cent increase in racial and ethnic diversity on

the senior-executive team. One of the reasons diversity improves business performance and stakeholder payouts is because sustainability and diversity dominate the media and public debate more than ever before. “Ethical investing is really about broadening the lens and looking at opportunities that the market may have missed, whether they’re environmental, social or governance risks,” Lamb says. “I expect we won’t call it ethical or sustainable investing in the future. Instead, it’ll just be called investing, because it brings into account the full spectrum of information.” Like most industries investment is no stranger to technology-driven disruption. At the same time some argue for a more human approach to investing, other professionals see the finance sector developing in a completely different direction. Quantitative traders, or algorithmic traders, eliminate the human factor from investing altogether and focus on developing the most effective algorithms for high-frequency trading. Martin Froehler, founder and CEO of algorithm marketplace Quantiacs, believes that algorithmic trading will make activist investing obsolete in the long run. Quant traders use mathematical models to make high-speed decisions and transactions based on advanced data mining techniques. Because algorithmic trading is not influenced by emotions or intuition and eliminates human error it generates unparalleled returns for investors. “Algorithmic trading is a formula that reacts the same way every time it encounters the same situation,” Froehler says. “It’s developed using scientific methodology and tested thoroughly on historic data before it’s put into production. The recent success of quantitative hedge funds has shown that this is the method to use if you’re serious about being successful in the market.” Since the global financial crisis, algorithmic trading has been steadily gaining ground. Capgemini’s 2015 High Frequency Trading report found that algorithmic trading accounts for 56 per cent of the volume of the entire equity turnover in the US and it’s expected to continue growing. A 2016 Technavio report estimates that the quant industry will grow steadily at a compound annual growth rate of more than 10 per cent by 2020.

Ackman predicted that Herbalife’s stock price would reach zero in a couple of years. So what went wrong?

HERBALIFE

As automation takes hold of the financial world, activist investing could disappear

Herbalife’s various sponsorship deals have raised its profile in cities such as LA

Algorithmic trading may not fully replace activist investing in the short run, but Froehler believes the days are numbered for disruptors like Ackman. He predicts that the algorithmic trading sector will grow as its underlying technology becomes more sophisticated. The development of artificial intelligence in particular could have a major impact on how the field will evolve over the next few years. “Algorithmic trading is certainly the trading style of this century, and it’ll gain more and more ground,” Froehler says. “We’re entering the era of big data and that’s exactly what trading algorithms need in order to exist and thrive. It’ll become more and more important to use algorithms for all trading styles in future, as a support for the decision making process at minimum.” There will always be people who try to change companies via activist investing even though it is not a guarantee of success. Facebook, for exam-

ple, recently rejected Arjuna’s proposal to publish a formal report about the prevalence of fake news on the site and its impact, with CEO and founder Mark Zuckerberg claiming that the company already has such a programme in place behind the scenes. Sustainability and diversity are important considerations for 21st century shareholders but a focus on these issues does not always lead to the best possible profit. As automation takes hold of the finance industry, activist investing will almost certainly become less common. Investors are naturally driven by performance and quantitative trading is proving to be the most effective strategy. If the technology algorithmic trading depends on continues to develop, and if the sector manages to reach out to potential quants who currently work in other sectors, quantitative trading will eventually account for a greater market share than activist investing. Ackman’s recent ill-fated campaigns demonstrate some of the difficulties that activist investors face. However, with Ackman admitting that he has already spent over $1 billion dollars on his campaign against Herbalife, he can’t back out now. In March this year, Bloomberg reported that Ackman’s hedge fund Pershing Square lost $4.2 billion dollars when it sold off its shares in pharmaceutical company Valeant. If Herbalife’s plans to go private go ahead his short selling bet against the company could be “squeezed”, because the fees to borrow shares for short selling will go up. The growth of quantitative trading, along with the volatility of activist investment as a trading strategy, suggests that human intervention may play a less significant role in the investment sector in the long run. Algorithms are already responsible for the results of some of the most successful hedge funds, and their effectiveness will only improve as the technology does. In the end, business performance and shareholder payouts are still what really counts for investors, and traders will gravitate towards trading styles that offer maximum profit while also minimising risk.

CHINA’S ONE PER CENT Jamie Fullerton examines the crackdown on China’s rich, and how the luxury tide may be turning

CHINA’S ONE PER CENT

n a Monday afternoon in Shanghai in September, around 10 customer s milled around outside a mall branch of Louis Vuitton. Shanghai is stuffed with high-end designer clothes stores and is arguably China’s most fashion-fixated city, but an observer still felt compelled to capture the moment. “China luxury back,” tweeted business book author Shaun Rein, alongside a photo of the scene he happened to be passing. “Lineups again at LV Shanghai store. Haven’t seen this for years.” Figures back up Rein’s declaration tweet. After a slowdown in growth from around 2013 to 2015, the Chinese luxury market, arguably typified by the Louis Vuitton handbags seemingly now in so much demand again, is on the up. A report by Bain & Co released in February this year revealed that the market grew by four per cent in 2016, marking its first significant revitalisation in three years. In May, Bain predicted that growth for personal luxury goods such as jewellery and handbags would continue to grow throughout the year, by between two and four per cent to potentially be worth $306 to $312 billion. “The final figure could even beat that,” says Bruno Lannes, a Shanghai-based partner at Bain “Everything I hear from the brands is positive.” But if it is true that, as Rein put it in his tweet, “China luxury back”, why did growth go off track, what caused the return to form, and are the lucrative times likely to stay?

Firstly, following years of rampant growth in the market as China’s economy boomed and its middle class expanded, the 2013-2015 slowdown coincided with a tough and wide-ranging crackdown on corruption and conspicuous consumption in the country by President Xi Jinping. On October 1, 2012, a “frugal working style” rule was imposed on China’s civil servants, meaning that the previously common practice of receiving or giving luxury items such as watches and clothes bought with public money – and often associated with bribes – was out of the window. Ahead of the crackdown Chinese state media declared: “Luxury products are highly expensive and civil servants, whose salaries are about 5,000 yuan [ $ 790 at the time] a month, cannot afford them. So officials who possess luxury products should give convincing explanations on how they got them.” Later Xi suggested that, corrupt or not, many of those who could afford luxur y items themselves should cut down on them, too. Over the past five years, coinciding with the rise of Chinese social media platforms such as the Twitter-like Weibo, there has been an enormous backlash among the Chinese public against a generation of hard-partying, cash-flaunting young Chinese known as fuerdai, which translates as “rich second generation”. Members of this generation such as Guo Meimei, once considered the queen of the fuerdai before being jailed for gambling crimes and caught up in sex scandals, caused public outrage by posting photos of their bank statements online and boasting about their seemingly endless streams of luxury purchases. Many of them have links to government or other notable officials, such as Ling Gu, son of high-ranking Communist Party official Ling Jihua, who was killed in 2012 aged 23 in a car crash in Beijing. He wrote off his Ferrari 458 Spider while alongside three female pas-

There’s been a backlash against the hard-partying, cashflaunting Chinese known as fuerdai

CHINA’S ONE PER CENT

sengers, two of them naked. Censors attempted to cover up the incident on social media, only fuelling the backlash against the crass luxury lifestyles of brats such as Ling Gu. In early 2015 Xi stepped in. He demanded that the United Front Work Department, the body that manages the relations of China’s non-political elite, “guide private-sector businessmen, especially the younger generation, to help them think about the source of their wealth and how to behave after becoming affluent”. The department said: “Some rich young people know only that they are rich, but have no idea where the money comes from. They know only how to show off their wealth, but don’t know how to create wealth.” Xi has made taking down both ‘tigers’ and ‘flies’ – high-level and low-level corrupt officials respectively – one of the major drives of his presidency, which at the time of writing looked certain to be extended to a second term following the communist party’s October congress. In China, where the state permeates so much of life and business, anyone from a high-flying politician to a teacher or manager at a staterun company can be considered an ‘official’. Over a million have been punished for corruption under Xi, with punishments ranging from mild public shaming to life sentences in jail. Fo r e s h a d owe d b y t h e s t a t e media comments about luxury gifting among civil servants, bribery indeed turned out to be a common crime among corrupt officials felled in the crackdown. As a result, a sense of fear spread through China’s moneyed elite, corrupt or otherwise, resulting in a widespread reluctance to be seen splashing cash on luxury items. “In elite circles almost everyone has a friend or acquaintance who has ended up in jail,” says Sara Jane Ho, a brand consultant who is at the centre of a large network of enormously affluent Chinese women via her elite Beijing-based finishing school, Institute Sarita.

“A lot of people were really cautious,” she adds. “Around this time it wasn’t that people didn’t have money, it was that they were very, very careful about how they were spending it. People with any influence were sitting still and watching [the anti-corruption campaign].” Bain agreed, declaring in 2013: “The highly visible government campaign encouraging frugality and focusing on corruption had a large impact on gifting, which had been one of the major growth engines of the [Chinese luxury] sector.” The firm noted that sales of luxury watches – common gifting items in China – declined by 11 per cent in 2013. The crackdown was not the only factor stunting the market’s growth. In the decade prior to 2012 many international luxury brands operating in China found that demand for their products was so high, they could keep increasing prices and piling up profits with little backlash. Their greed arguably went too far, with prices of luxury goods in China sometimes over 50 per cent higher than they were in markets such as Hong Kong, South Korea, the US and Europe. “There was no limit to what some people would pay, because it was gifting related [therefore paid for with public money],” says Lannes. “So they kept increasing prices, but it was at a time when Chinese consumers were becoming more integrated into the world economy, with more travel.” The result of higher domestic prices and more worldly potential customers was that, informed by wider horizons and price comparisons on the internet, many Chinese consumers found out that they could buy the same products far cheaper abroad. In 2015 a Fortune

“Some young people know how to show off their wealth, but don’t know how to generate it”

CHINA’S ONE PER CENT

survey found that about 64 per cent of them bought luxury goods abroad instead of in China. It all added up: statistics suggested that the crackdowns worked but that Xi’s big luxury squeeze, combined with more Chinese shoppers buying overseas, came at large economic cost. In 2013 China’s luxury market’s growth slowed from seven per cent in 2012 – the year in which Xi took power in China – to two per cent. In 2014 the market shrunk by three per cent, then in 2015 grew by just one per cent. Then came Bains’ declaration of the four per cent growth in 2016, and the flurry of headlines. “China’s luxury goods market begins recovery as middle class shoppers eye bargains at home,” declared the South China Mor ning Post, with countless other similar variants dominating the pages of financial media outlets around the world.

Personal luxury goods such as jewellery and handbags continue to be in high demand

The Financial Times reported that as much as 80 per cent of luxury shopping by Chinese consumers was done abroad during 2013-2015, but that luxury brands were almost unanimously reporting far healthier domestic sales figures in 2016 – tallying with the four per cent growth figure Bain reported. Hugo Boss declared a turnaround in the market, Burberry said its expansion in Asia was fuelled by “high single-digit comparable sales growth” in China, and many analysts reported a “feel good factor” returning among Chinese luxury shoppers. Chanel played a huge part in this turnaround. After years of ramping up prices in China to capitalise on demand, many international luxury brands embarked on what they called a “price harmonising” process, reducing prices in China so they were more in line with those abroad.

CHINA’S ONE PER CENT

Spending on fine dining and luxury cruises increased as that on handbags and watches decreased

Chanel pushed the first major domino in March 2015, cutting prices in China in a move largely designed to combat grey market imports from regions such as Hong Kong. Fashion Network inter viewed customers delighted by the move. A 32 year-old housewife named Emma Yu summed up the new shopping mentality nicely: “Some brands price their products in China closer to the overseas markets, such as Chanel. If there’s only a few thousand yuan difference, I would just buy it at home.” This price harmonisation was a huge factor in the recovery, but many others dovetailed with it. Although Xi’s corruption crackdown was showing no sign of abating, after a few years of many Chinese shoppers staying under the radar in terms of conspicuous spending, many believed that the biggest graft sweep had been completed. “Two or three years was enough of sitting and watching and seeing what blows over,” says Ho. “It’s always a cycle.” Tastes were shifting, too. Whereas previously luxury spending tended to revolve around handbags, watches and designer clothes, many researchers found that luxury market consumption was being made across more varied sectors. Going on luxury cruises is currently a rising trend among the middle classes, as is spending on fine dining – activities far less associated with corruption than buying reams of Rolex watches for gifts. “People’s idea of luxury [in China] has indeed been changing,” says Amrita Banta, managing director with research firm Agility Research &

CHINA’S ONE PER CENT

Left: A woman drives a Ferrari through central Beijng Below: China’s elite have been increasing players in the global art market

Strategy. “It was about wearing labels and buying because of status, not so much about quality or craftsmanship, but now Chinese consumers are more disconcerting. A few years ago they’d just fill their bags with Chanel and Cartier… but the new way is not to show off the bag or the watch, it’s the holiday in the Maldives or dining at a Michelin-starred restaurant.” The government has made big efforts to shore up domestic consumption too, likely rattled by the growth slowdown. During 2012-2015, with luxury brand prices often astronomically higher in mainland China than they were abroad, Chinese consumers hauling suitcases filled with foreign-bought luxury goods to sell on or gift in China was common. This grey market, known as daigo, was particularly prevalent between Hong Kong and Europe and the Chinese mainland, with consumers often bringing goods back then using platforms such as Alibaba’s retail site Taobao to sell them on. “You also had what you call ‘personal daigo’, which is, say, your friend or secretary buying five or 10 bags or watches abroad then paying for the trip by reselling them [in China],” says Lannes. “Even if they were selling at minus 25 per cent of the Chinese price, they were still making money on it.” Daigo sales don’t comprise part of China’s GDP, so the government moved to crack down on them. Luggage checks for incoming passengers to China have become more stringent, tax on imported luxury goods higher, and Chinese retail sites have been investigated for illegal daigo sales. The brands’ price harmonising process has made the daigo process far less lucrative, and although there are no official statistics regarding daigo pur-

chases in China most experts believe that these factors have led to their decline. Other negative aspects of the Chinese luxury market have been dealt with, too. The development of item authentication computer programs has increased confidence among customers with regard to the authenticity of designer goods, in a country in which knockoffs have been common for decades. The price harmonisation process also had a positive marketing effect. The move saw Chinese social media chatter about luxury brands largely change from discussions about where the best bargains can be bought abroad, to the quality and values represented by the products. “Before, people were talking on social media about whether you should go to Korea or Paris to get the items – they weren’t talking about the brand values at all,” says Lannes. “It was killing brand equity. Now, they actually talk about the products and collections.” Currently around one-third of the world’s luxur y products are consumed by Chinese customers. And with the anti-corruption-led growth glitch in the rear view mirror, the country is expected to be the global focus of the market for the foreseeable future. The Economic Intelligence Unit (EIU) predicts that by 2030 China’s middle income g roup ( d e fi n e d as e ar n i n g $ 1 0 , 8 0 0 US $ 32,100 a year) will rise from the 2015 figure of 7.1 per cent of the population to 19.7 per cent. More significantly for the Chinese luxury market, the EIU predicts that the population of high-income individuals (those who earn more than $32,100) will make an enormous leap, from 2.6 per cent to 14.5 per cent. “As consumers become richer, they will be more demanding for higher quality of goods and services,” said Dan Wang, the EIU’s China analyst. “It’s big opportunities with the sheer numbers,” adds Banta. “You’ve also got 450 million millennial in China who all want to spend.” Basically, you can bet your Louis Vuitton handbag on another three-year growth slowdown not occurring in this market for quite some time.

Despite the crackdown, one-third of the world’s luxury products are consumed by Chinese customers

ILLIQUID ASSETS David Whelan explores the inevitability of a cashless society and the consequences of such a change

cashless society seems idyllic: wallets relieved of change and loose notes, an end to the tyranny of coins hiding beneath sofa cushions, the death of that panicked search for change to pay the toll road. In many respects, however, we’re already there. Cash is becoming an increasingly rare thing in the physical form – nowadays we mostly pay by pin, signature or, the latest invention toward helping us forget that money is real, the tap. In recent years, how often have you gone out with a sizeable amount of cash on you? Chances are, the answer to that is in the single digits. Cash is becoming a burden – an irritant that seems to be receding to the dimly lit spaces of bar and club entrance fees, and only required at the most inconvenient times. Technology is always creeping. It’s strange like that – its invisible fingers slipping into your life and swapping out obsolescence for something new and convenient. It seems ludicrous to think that the very first iPhone was only release a decade ago or that Bitcoin – an online only cryptocurrency invented by Satoshi Nakamoto – was first made public in 2009. Paper cash (itself a misnomer as most cash is made from cotton) seems the logical next step. But, just as with books and vinyl, mankind is a fairly nostalgic beast. Will it be so easy to just let it go? And what would happen if we did? While cash itself may die, the idea of cash will always remain.

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According to the US Consumer Payment Study, only 11 per cent of Americans prefer to pay by cash – most, unsurprisingly, favour the plastic. It’s a growing trend that’s seen globally, from Shanghai to San Francisco. It seems a lifetime ago that former US Federal Reserve chairman, Paul Volcker, described the ATM – which turns 50 this year – as “the only useful innovation in banking”. Cash is, after all, an anachronistic item, which feels a tad out of place in a world where you can now stream movies at a click of a button and talk to a centralised hub to order yourself a pizza. But this is – it should be noted – a very Westocentric standpoint. In 2013, for example, approximately 85 per cent of the world’s transactions involved cash – with Egypt, Saudi Arabia, Peru and Malaysia only making one per cent of transactions in credit. “I think we’re moving towards a cashless society fairly inevitably,” says Jan Dawson, chief analyst at Jackdaw Research, which specialises in the intersection of devices, connectivity and services. “But that’s not to say that it’s coming immediately. Instead, we’re going to see pockets of the economy go increasingly cashless while others remain more cash-dependent.” These pockets can be anything – from service industry tipping to charity fundraisers, even towards the young and elderly, who may be left out of pervading trends. Cash will always be king in collecting small sums and turning them into mountains. In countries like the United States, however, unbanked people and companies pay, on average, four times more to access their cash. “It’ll change the way we live in several ways,” says Dawson. “Notably, it’ll make it much tougher to conduct transactions that don’t create an electronic record of some kind, and therefore potentially reduce tax avoidance and other forms of fraud. But it’s also likely to marginalise sectors of the economy and segments of the population that are heavily dependent on cash whether for their income or for paying for things.” Sweden is the hotly tipped country to reach the cashless utopia first. A groundbreaking nation in many ways, Sweden’s banks were paying employees digitally all the way back in the ’60s. Nowadays, the app Swish controls around nine million payments a month, and retailers are actively encouraged to refuse cash. It is, in fact, impossible to ride a bus with cash in the country, or buy a metro ticket in Stockholm without a card. In 2015, cash transactions made up an extinction level two per cent of all movements of money. This is quite a dramatic shift from 1661, when

Cash is still dominant: in 2013, 85 per cent of the world’s transactions involved cash

Stockholms Banco issued Europe’s first ever bank notes. Niklas Arvidsson, professor at Stockholm’s Royal Institute of Technology, predicts that Sweden will be entirely cashless by 2020. There is also a solution for traditionally cash-based ventures, like street salesman or magazine vendors. Called iZettle, it’s a small plug-and-play card reader that can be used through a smartphone – this has supposedly increased day-to-day sales by upwards of 30 per cent. Other issues prevail, however, with companies such as Square and Amazon creating ways for industries that have primarily been cash-based to move to credit, primarily for their own financial gain. Venmo has taken over America, and in the process transformed the petty loan system to a simple click of a button. India is a good place to go for

ILLIQUID ASSETS

TOP FIVE CASHLESS COUNTRIES IN THE WORLD 1. Sweden Consumers have to pay by card or phone for everything from riding the bus to donating to their local church. Now, only three per cent of transactions are cash.

2. Norway A recent drive has seen a number of banks refuse to give out cash to customers in an attempt to stop money laundering and curb the black market.

3. Denmark Almost one-third of the country uses the app MobilePay to make payments. Petrol stations and restaurants can legally refuse to take cash at all.

4. Belgium The government has banned cash transactions of more than €3,000 in an effort to promote cashless transactions. It’s working, with 93 per cent of the population shunning cash.

5. Somaliland Despite being one of the poorest countries in the world, it has embraced cashless payments, with the average consumer making 34 online payments per month.

comparison, and warning signs. Back in November 2016, prime minister Narendra Modi announced that the government would be removing the Rs500 and Rs1,000 notes – overnight. This effectively meant that 86 per cent of the cash in circulation in India was made redundant at the sound of a bell. Unsurprisingly, this caused a fair few issues, in particular with the poor, who do not have access to banks and whose financial transactions were 97 per cent cash. Savings were rendered worthless and entire industries – such as New Delhi’s informal recycling systems – had to entirely reconfigure how they paid their workers. “The biggest unintended consequence is further marginalising those who are already marginalised,” adds Dawson. “The undocumented, the poor, those who do manual labour, the homeless and others who tend to be more cash

The Stockholm metro. Sweden is expected to soon become completely cashless

dependent and either less willing or able to use electronic forms of payment.” An unexpected repercussion of Modi’s decision was that Paytm – the Indian e-commerce platform – saw a 435 per cent increase in traffic, a 200 per cent surge in downloads and, most crucially, a 250 per cent jump in transactions and transaction value. In other words, a drop in cash money resulted in a large expansion in digital. Presumably, this was precisely what the government wanted: a far more regulated, easy to track system of payment. Time, however, showed that traits aren’t so easy to regulate. Just five months after the shift, the Reserve Bank of India reported that cash withdrawals had increased by 0.6 per cent, as people moved toward storing their money outside of the system. This is not without its wisdom – the variation and

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depth of digital fraud is far more extensive than with paper cash. This is paralleled in 2008, during the crash, as places such as Australia’s Reserve Bank saw cash withdrawals increase by 12 per cent in an attempt to maintain value of assets. Ken Dogoff, the Thomas D Cabot Professor of Public Policy and Professor of Economics at Harvard University, agrees. He argues that the removal, in particular, of large denominations of paper cash “would likely have a significant impact on discouraging tax evasion and crime”. Dogoff, however, alerts us to a potential personal negative: it would help banks to instigate negative interest rate policies – payment by the individual to have their money stored in a bank – which have so far proven elusive, due to the customer’s ability to hold onto their money in cash form. In the long term, however, this policy would help reinvigorate economies and prevent crashes similar to 2008. Going entirely cashless would shorten the distance between the state, finance and the individual: a dream for some, and a nightmare for others. At a personal level it’s easy to forget how cash allows us to easily manage our own finances – to be able to visualise, however untrue, that there is a pile of money somewhere with our name on it. As Dogoff argues in his book, The Curse of Cash, “anyone who thinks that debit cards, cell phone payments and virtual currencies are already

Less cash would mean less crime, the black market eradicated and set wages adhered to

burying cash could not be more wrong. Demand for most advanced-country paper currency notes has been rising steadily for more than two decades. Believe it or not, as of the end of 2015, $1.34 trillion worth of US currency was being held outside banks, or $4,200 floating around for every man, woman and child in the United States.” $1.34 trillion is roughly the equivalent GDP of New York State, the third wealthiest state in America. Where this money is going or circulating is another question altogether. The leading theory argues that it’s off-the-books wages or the black market. This is a fundamental part of our dedication to cash. It’s yours. It’s private. Cash does not know nor indeed care who is holding it. It is servant of whoever has it in their pocket. It is untaxable, beyond reproach – there is a primitive sense of security when you have money in your hand, which is only increased when you hide it somewhere only you know. You cannot hack a note or a coin. This will change, of course, once societies become digitally native – but for now, cash is still a king of sorts. And it may not even be in decline. One less-considered repercussion of removing physical money involves the living things on the bills we use every day. There are – according to the Dirty Money Project – more than 3,000 types of bacteria on every single note and that the act of trading cash between people helps us become more immune to each other’s individual microbiome. In other words, we may become physically sick without cash. The more pathogens a single note holds, the greater our capacity to develop defence mechanisms against unfamiliar places or conditions. There are practical benefits, too, such as the reduction in the amount of weight each person carries and, rather slap-sticky, prevent spinal issues from sitting on overstuffed wallets. Emotionally, too, we may enter into a strange dissociated space. Imagine, for a moment, the feeling of a large payment – it feels good, but nowhere near as bad as it feels to lose the same amount. This is known as loss aversion. It’s an innate trait that compels us to protect what we have, and to store. When we use cash to buy products, we tend to be far more frugal than with credit cards. A cashless society may push us further from that – and we may eventually lose sense of value, until it is too late. Germany, for example, recently surveyed its population and found that a fifth of the population “enjoyed” the sensation of carrying cash. What’s more, there is no figure to be placed on the anonymity of cash – it allows us to buy what we want, when we want, without the history of that purchase on your credit card bill. This taboo of cash, which will

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During crises, people tend to favour using cash – digital fraud is just one reason for that

most likely remain too embarrassing to cover publicly, is a huge part of its appeal. Other organisations, such as the UN, believe that a move to a cashless world would, in fact, have long-term benefits for the poor. By its Better Than Cash Alliance’s own words, eradicating cash would “reduce poverty and drive inclusive growth”. The thinking is simple: that with less physical cash in circulation, crime would be reduced, the black market all but eradicated and set wages would be adhered to. It sounds ideal but there are roadblocks to traverse – such as re-education. In 2014, a study in India found that only 10 per cent of the population

Visa has long dominated the credit card market, but new payment methods may challenge its supremacy

had ever made a digital payment. The transformation into the future will not be an easy one. A look across Asia – in particular, China – and the facts show that the future may already be coming to the present. In 2016, Chinese spent an astronomical $ 5.5 trillion in mobile payments. These systems, which are similar to Apple Pay, are the next step towards a cashless world. Cities such as Hangzhou in the Zhejiang Province of east China are leading the way – it’s possible to pay for everything from public transport to clothes to entire meals on nothing but the Alipay app. A cultural reason may be behind this. Credit cards were a slow-starter in China, due to a desire not to go into debt – a smart move, by all accounts. Cheng Lian, Chinese Academy of Social Sciences research fellow, put it simply: “Traditionally, Chinese people didn’t want credit cards, because they didn’t want to owe anyone money.” Another key twist was the linking of payment apps directly to debit cards, and then using cellular networks to transfer money – thus bypassing the occasionally unreliable credit data networks. If people have phone signal, they have money. Other countries surprise in their dedication to digital cash. Somaliland, the fourth poorest country in the world, has embarked on a nationwide project entitled the ZAAD, a phone-based money transfer system that can be used on even the most basic models. This has proven a huge success – with each individual making around 30 transactions on their phone a month, which is far higher than the global average of 8.5 transactions. In many ways, cash does feel archaic, reminiscent of a bygone age where humans traded goods for services. And, yet, we need it, and it doesn’t seem like we’re letting go any time soon. While we are inclined to tend towards the binary either/or, it seems far more likely that we’ll tread the excluded middle – where cash will slowly be phased out from day-to-day practice, but always on hand to help, when we most need it. After all, what’s the point of money if you have nothing to show for it?

THE JAMES PATTERSON INDUSTRY David G Taylor investigates one of the most successful – and controversial – writers in the world

THE JAMES PATTERSON INDUSTRY

James Patterson and co-writer Stephen J Cannell guest-star in an episode of their ABC show, Castle

iss the Girls, Along Came a Spider and Alex Cross are just a few of the gripping, if grisly, James Patterson novels to splatter across the big screen. But whether you’re a cinephile, a bookworm or just graze on the news, the author from New York’s Orange County has been hard to ignore, breaking literary rules and records with the same wanton abandon that his fictional villains dispatch victims. “Ultimately, a great thriller is a rollercoaster ride,” he says. “I like to think that’s a promise I have never failed to keep.” Patterson’s entitled to be confident. He has sold more than 350 million books worldwide, including the popular Women’s Murder Club series. He holds the Guinness record for the most entries on The New York Times bestseller list – 114 so far – and in 2010 was the first author to sell more than one million e-books with 1.14 million sales across devices such as Kindle and iPad. A maverick, he’s flouted conventions by collaborating with other writers, crossing genres from thrillers to romance, and even made success of children’s fiction with series such as Daniel X and the Maximum Ride – in the process becoming the first author to simultaneously have new number one titles on the NYT adult and children’s bestsellers lists. Now aged 70, the New Yorker has just been knocked off the number one slot of Forbes’ 2017 list of the world’s highest paid authors, a position he’s enjoyed for some years, by Harry Potter scribe JK Rowling. However, with earnings of $ 87 million compared to Rowling’s $95 million, he comes a close second and, according to Forbes, he remains “America’s richest author.” “I am a dinosaur,” James Patterson has claimed. “I write with a pencil – I do not use a computer. I write, I erase, I write some more. It’s kind of silly,

but it has worked for me.” Although Patterson may claim to be old-fashioned in preferring to write longhand, in many other ways he’s a modernist and a pioneer. Not least for his singular writing style, a rollercoaster of short sentences, alternating perspectives and breathlessly paced chapters. “When I write,” Patterson has said, “I pretend I’m telling a story to someone in the room – and I don’t want them to get up until I’m finished.” More noteworthy still is Patterson’s prolific output. Thirteen books bore his name in 2016 alone. “It’s funny that publishers were once against me writing more than one book a year,” he told The Guardian newspaper. “The situation has changed a lot since then. If I now said I was writing only one book this year, not 10, they would have a heart attack.” Po p u l a r w i t h r e a d e r s , Patterson nonetheless seems to be a divisive figure among fellow authors. In 2009 Stephen King told USA Weekend that d e s p i t e b e i n g “ v e r y, v e r y successful,” as far as he’s concerned “James Patterson is a terrible writer.” Perhaps, by way of retaliation, Patterson coauthored a new book alongside Derek Nikitas, rather cheekily entitled The Murder of Stephen King, a work of fiction about an obsessed fan hunting down the author of The Shining and Misery. The book was said to be ready for publication when, just last autumn, Patterson decided to pull the plug at the eleventh hour. "My book is a positive portrayal of a fictional character,” said Patterson in a press statement,

THE JAMES PATTERSON INDUSTRY

"A great thriller is a rollercoaster ride, and I hope that's a promise I have never failed to keep"

“and, spoiler alert, the main character is not actually murdered. Nevertheless, I do not want to cause Stephen King or his family any discomfort. Out of respect for them, I have decided not to publish.” He clearly has a sense of humour. What is it though that makes Patterson’s books problematic for some? “His detractors say they’re formulaic,” says author Paul Burston, whose latest book, the thriller The Black Path, was long-listed for The Guardian’s prestigious Not The Booker Prize. “But finding a winning formula isn’t as easy as it looks. Sustaining it for as long as he has is an extraordinary achievement. Personally, I prefer thrillers that are more character driven and better written. Nobody would claim that Patterson is a great stylist. The prose is often clunky. But if it’s plot you’re after, he’s up there with the best. Patterson’s books do exactly what they set out to do. They’re entertainments. They give readers exactly what they want.” Patterson helped established his name with the ground-breaking use of self-financed TV ads to promote his novels and just this spring he caused controversy once again when he appeared to review his own latest novel, stating: “I think The Black Book is my best work in 20 years. Better than Along Came a Spider and Kiss the Girls.” Patterson’s emergence as a giant of the literary world was quite a long time in the making. Born in 1947 in the little town of Newburgh, New York, he came from a comfortable if unremarkable background. His mother was a teacher and his father an insurance broker. Patterson’s talent for words soon became evident and he went on to gain a BA in English at Manhattan College in the Bronx and an MA in English at Vanderbilt University in Nashville, Tennessee. Quickly gaining a job in the advertising business, his former career was to install marketing savvy that was to prove so useful as an emerging author. Patterson’s first novel, The Thomas Berryman Number, was rejected by a disheartening 31 publishers, but when it was finally released on an unsuspecting public in 1976, it won the first of many accolades, the Edgar Award for Best First Novel. Despite this validation, the following 16 years saw Patterson publishing a handful of

THE JAMES PATTERSON INDUSTRY

He decided to take control of his own career, even if it defied conventional wisdom

novels and achieving only modest sales. It wasn’t until his 1993 breakout novel, Along Came a Spider, which introduced his popular protagonist, the Washington, DC-based forensic psychologist Alex Cross, that things started to change for Patterson. He cemented his reputation in 1995 with Kiss the Girls and retired as an advertising executive in 1996 to focus on his writing. A score of sequels featuring the Alex Cross character have since followed, as well as two film versions from the series, both starring Morgan Freeman in the lead role. According to crime writer Anthony Franze, however, it wasn’t only Alex Cross that propelled Patterson to international success. “It was his decision to take the reins of his career,” he says, “to do things his way, even if it defied conventional wisdom.”

70 Top: The cast of Zoo, Patterson's CBS show. Left: Bullseye, a book Patterson co-wrote with Michael Ledwidge

British author Sarah Hilary agrees. Patterson “smashed the myth that writers should stick to writing and leave everything else alone”, she told Portfolio. Hilary’s writing debut, Someone Else’s Skin, won Theakston’s Old Peculier Crime Novel of the Year in 2015 and was a World Book Night selection for 2016, success she’s followed with the sequel No Other Darkness. “I can’t think of another writer who has so much control over not only his content but his covers, his titles, his output, etc,” Hilary says. “He’s taken chances, often against the advice of his publishers, which have proved phenomenally successful.” The Telegraph once labelled Patterson a “bestseller factory” and one of the biggest criticisms the author has faced is for his collaborations with some 23 co-authors, provoking the accusation from some, according to Franze, that Patterson was treating writing a little “too much like a business”. “I’m not a writer’s writer,” Patterson has said by way of explanation. “I could be a craftsman. I could be, and that would be a one-book-a-year operation.”

THE JAMES PATTERSON INDUSTRY

TOP-SELLING FICTION AUTHORS

Agatha Christie

4 billion books sold 85 books

Barbara Cartland 1 billion books sold 723 books

Harold Robbins

750 million books sold 23 books

“No question it works, for him,” says Hilary. “Readers are voracious. However long it takes us to write a book, it will be read in a fraction of that time. He’s meeting that need, in style. Of course, it’s a team effort, since he’s working with co-writers. It’s easy to throw stones at that model, because we’re brought up to believe that writing should be solitary and torturous. For me, the truth lies somewhere in-between. The best stories come from deep inside us, but we’d be fools to think we don’t need help and guidance making those stories into published books. Collaboration is key.” “It isn’t terribly groundbreaking. It’s been done a lot,” Patterson told the Harvard Business Review. “The newspaper business, the movie business – they’re full of teams. I’ll write an elaborate outline, maybe 70 pages, very detailed, clear and focused. The co-author will write the first draft, and I’ll see the work every few weeks. I’ll do two to seven more drafts. I’m very easy to work with. I don’t do a lot of silly nit-picking. The job pays well. Everybody likes it. Nobody quits.”

Critics have questioned how much writing input Patterson has, and suggest he’s more a copublisher than a co-author

Danielle Steel

800 million books sold 120 books

Georges Simenon

500 million books sold 570 books

Collaboration is one thing, but some critics have questioned how much writing input Patterson has, suggesting he’s more of a co-publisher than co-author. In April this year, James O’Sullivan of The Independent went so far as to digitally test the theory under a headline posing the question ‘James Patterson: Is the world’s bestselling author the main writer?’ “The field is called stylometry and it has been used in author attribution studies involving popular figures like Harper Lee and Rowling,” explains O’Sullivan. He and a colleague had applied stylometric methods to the work of Patterson, “in order,” says O’Sullivan, “to form an impression of how much he contributes to the writing of his books in terms of the actual words used.” The results of the study indicated that, in each of the collaborative novels checked, the dominant writing style was that of Patterson’s co-authors. “This isn’t a ‘Gotcha!’ moment,” O’Sullivan insists. “Patterson has always given the impression that he’s more about the

THE JAMES PATTERSON INDUSTRY

Is Patterson a literary genius, a philanthropist or a literary scammer?

plot. But it is confirmation that the world’s bestselling author may not principally be a writer.” “At a superficial level,” O’Sullivan explains, “this tells us something about Patterson’s practices, how it is that he has managed to sustain such prolific output. But it also challenges notions of authorship. What is the significance of Patterson’s name on a dust-jacket?” he asks? “Is it mainly an endorsement, a valuable moniker that generates sales? Or is he properly seen as an author, just one who is attracted to the possibilities of narrative structure over those of language?” What with some 150 titles and multimillion book sales to his name, whatever your opinion of Patterson’s process, the man has at least encouraged millions to put down their smartphones and read. It’s something he’s actively engaged with in a philanthropic sense too, donating millions of his profits to promote the uptake of literature and literacy around the world. He’s especially keen to get kids into books. “Reading is one of the building blocks of life and can take you to another world. It encourages imagination and helps with school,” Patterson told The Guardian. “When my son, Jack, was eight, he wasn’t excited about reading. Neither were many of his friends at school. I was thinking, well wait a minute here – if the son of an author doesn’t enjoy books, what’s going on with our kids in general? Is this a problem we have to tackle? And, of course, we quickly realised that was a resounding YES.” Among Patterson’s many reading initiatives he launched the website ReadKiddoRead.com to assist adults choose the best books for kids, donated hundreds of boxes of books to US schools, and since 2014 has donated $648,000 to independent bookshops in the UK and Ireland with similar projects in other countries including New Zealand and Australia. Through his Patterson Family

Patterson's novels have seen him earn $95 million in 2016 alone

Foundation, he also awards annual scholarships to students at 22 US colleges and universities. Patterson’s efforts have scooped him awards including America’s N a t i o n a l B o o k Fo u n d a t i o n ’s Literarian Award for Outstanding Service to the American Literary Community in 2015 and an Outstanding Contribution to the Book Industry at The British Book Industry Awards in 2016. So how should the man and his extraordinary and frequently controversial contributions be classified? Is he a philanthropist, literary genius or merely some kind of storytelling scammer? “I don’t think he’s a literary genius,” Burston says, “but neither is he a scammer. He’s certainly a philanthropist, and while he may adopt a ‘factory’ approach to his books, he’s still the writer in the same way that Warhol was still the artist, whoever physically made his screen prints. Without Warhol’s artistic vision, they would never have been made.” “Patterson,” he says, “works more like a senior TV writer who has a team of junior writers working with him. He shapes the story, setting the tone and the pace. He once compared himself to Vince Gilligan, writer and creator of Breaking Bad. I think it’s a fair comparison.” But what of the charge that Patterson is more of a brand than a bona fide writer and author? “People tend to be quite snobbish about authors who turn themselves into brands but there aren’t many who can pull it off,” Burston says. “What seems to irritate some people is that Patterson has so many other writers helping him. But he’s honest about it. Nobody seriously thinks that Paul Newman made his own salad dressing. That doesn’t prevent them from enjoying it.” And, he adds, “Patterson contributes far more to his books than Newman ever did to those salad dressing.”

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Luxury escapes The ‘owner’s cottages’ of New Zealand’s Robertson Lodges take luxury lodging to a new height

OCTOBER ISSUE 142

LIVING / HOTEL

ROBERTSON LODGES

WHERE TO STAY

New Zealand

PRICE from $4,500 per night

robertsonlodges.com

 AKL

hen the Silicon Valley super rich started piling in to New Zealand real estate a few years back, building opulent bunkers in preparation for Armageddon, US hedge fund billionaire Julian Robertson must have been amused. The legendary founder of financial behemoth Tiger Management had put his stake in the ground two decades earlier and now operates a triumvirate of luxury lodges under the Robertson Lodges banner – Kauri Cliffs, Cape Kidnappers and Matakauri Lodge. Located in disparate corners of New Zealand’s other-worldly wilderness, they are flanked by kauri forests, waterfalls, alpine glaciers and secret pink-sand beaches. Then there’s the all-inclusive private club style of hospitality with formal fine dining (gentleman must wear jackets), world-class wine cellars and some of the best golf on the planet. But it’s Robertson’s three private homes tucked away within the properties – two of which are still

The lodges are located in disparate corners of New Zealand’s otherworldly wilderness

working farms - that offer the extreme in high-end travel. The ‘owner’s cottages’ have hosted everyone from Hollywood royalty to actual blue bloods and are beautifully designed, multi-suite villas with infinity pools, staff quarters and showstopping views. But it’s the personal touches – Robertson’s private libraries, freshly baked cookies that magically appear and the odd Picasso – that make staying in the lap of luxury still feel like home.

OCTOBER ISSUE 142

FROM THE CONCIERGE

SEE

Gibbs Farm is an open-air sculpture park located in Kaipara Harbour, 75 minutes drive north of Auckland. It contains the largest collection of large-scale outdoor sculptures in New Zealand, commissioned from some of the world’s most significant artists. It is open to artists, educational institutions, charities and the public. By prior appointment only.

EAT

New Zealand’s quaint South Island skitown, Queenstown, is a gourmet heaven. Hot tables include Michelin-starred chef Josh Emett’s Rata Dining and Matakauri Lodge’s private dining room with views across Lake Wakatipu to The Remarkables ski fields.

PLAY

Kauri Cliffs is a par 72 PGA championship golf course ranked in the world top 100. The course, designed and built by David Harman, has sweeping ocean views of the Bay of Islands from 15 holes and is part of the privately owned Robertson Lodges collection.

OCTOBER LIVING / INVESTMENT

ISSUE 142

Comic books With the right research, comic book investments can be very rewarding

Has there â€“ or is there likely to be â€“ a film adaptation? This is one of the main drivers of price, particularly with regards to smaller print runs. 2

Find out how many comics were printed. The smaller the print run the better.

The condition of the comic is of utmost importance. Check the spine and every page for tears, as you want your investment in mint condition.

hile they may seem rather childish, there is a huge market in second-hand comic books, with the rarest selling for millions of dollars. Take the All-American Comics edition pictured, the first to feature the Green Lantern. Published in 1939, and costing a princely sum of 10 cents, it is now worth a cool $725,000. The key to comic book investing is to buy the comics when they are published, as even relatively common ones can go up 10-fold in value when resold on eBay. Sites such as Heritage Comics and Mile High Comics are also great to trade in them. Do your research, store and ship them properly, and there could be some money to be made.

LIVING / STYLE

What to pack ...for autumn weather in Barcelona and beyond

Average temp

19°c

Bucharest Istanbul Budapest Cape Town

ALSO WEAR IN...

18°C 20°C 17°C 17°C

OCTOBER

BARCELONA

Chance of rain: 15%

WHAT TO SEE

LA SAGRADA FAMILIA One of the most iconic buildings in the world, the Sagrada Familia is the unfinished church designed by Gaudí, a church unlike any. It’s Gaudí’s own interpretation of gothic architecture, and is incredible both inside and out. Guided tours are available, although be prepared for

the construction work – the building is due to be finished by 2026 – and the hordes of tourists. Standing at 172 metres tall, it dominates the city’s skyline and is a testament to the genius of Gaudí, whose work is visible across the city. Check out his wonderful Park Güell, which is a whimsical piece of urban planning.

OCTOBER

ACCESSORIES

ISSUE 142

Dita Eyewear Mach Five d-frame sunglasses $1,105 matchesfashion.com

Thom Browne striped pebblegrain leather billfold wallet $580 neimanmarcus.com

Emanuele Bicocchi Sterling silver chain bracelet $491 harveynichols.com

3 1

2 4

1. Norwegian Rain Pilot Plus technical-fabric parka $1,017, matchesfashion.com 2. Brunello Cucinelli slim-fit denim jeans $858, mrporter.com 3. Valentino panther-appliquĂŠ wool and leather bomber jacket $3,523, matchesfashion.com 4. Versace Black Swarovski-embellished cotton T-shirt $733, harveynichols.com 5. Corthay Duke Leather Cutout Derby Shoe $2,097, neimanmarcus.com

LIVING / STYLE

What to pack ...for autumn weather in Dallas and beyond

Average temp

25°c

Phuket Tunis Athens Taipei

ALSO WEAR IN...

24°C 22°C 22°C 25°C

OCTOBER

DALLAS

Chance of rain: 19%

WHAT TO SEE

WINSPEAR OPERA HOUSE While Dallas might not be immediately associated with culture, the city has lots of it, no more so than the spectacular Opera House, which was opened in 2009. Located in the centre of downtown, the interior is spectacular: look out for the 318-rod chandelier as

well as the incredible wraparound balconies. The venue has become a centre of the arts in the city with several events taking place each month. Check out their website and enjoy a slice of culture alongside the city’s elites. Expect to see everything from classic opera to musicals to theatre.

OCTOBER ISSUE 142

ACCESSORIES

1 2

Larsson & Jennings liten saxon rose gold-plated watch $425 harveynichols.com

Dolce & Gabbana embellished printed textured-leather iPhone 7 Plus case $452 net-a-porter.com

Brunello Cucinelli monili cube wristlet $2,898 neimanmarcus.com

83 1. Burberry Crewdale camel hair and wool-blend coat $2,304, net-a-porter.com 2. The Row candice ribbed wool jumper $1,631, harveynichols.com 3. Bottega Veneta graphic-print stud-embellished silk-blend dress $5,687, matchesfashion.com 4. Roger Vivier stretch-satin crystal buckle boot $2,253, neimanmarcus.com

LIVING / FOOD

A heady brew

ith names like Beavertown Neck Oil, Blitzkrieg Hops and Skull Splitter, craft beer certainly knows how to grab your attention. It’s the brash young upstart of the beer world, frequently brewed in small batches by tattooed artisans with hipster beards, and often consumed in moderation at a high price by discerning drinkers for whom bland mass-produced beer is all fizz and no flavour. Well, that’s how it’s sometimes portrayed. Craft beer has certainly been flowing into the mainstream lately, with bottle shops, brew houses and taprooms springing up in cities everywhere, from New York City to Nizhny Novgorod. But while some commentators say we’re at ‘peak craft’, and as big beer companies look to swallow up smaller breweries, there can be little doubt about craft beer’s impact in a market that was beginning to go flat. Craft beer is easier to swallow (with a nice handmade, free-range scotch egg) than it is to define. In America, the world’s largest craft beer market, the US Brewers Association insists craft beer must be produced in a small, independent brewery, at no more than six million barrels per year. Whereas in the UK, known for its long brewing tradition and real ale culture, the Society of Independent Brewers (SIBA) says craft breweries must be independent, produce less than 200,000 hectolitres per year, and must adhere to the SIBA’s guidelines for good brewing.

BIRMINGHAM, ENGLAND

James Brennan explores the resurgent world of craft brewing

 BHX

Flavourful beer in small batches is nothing new. Prior to the multinationals, most beer was characterful and reflective of its locality, whether it was made in a Czech brewery or a Belgian abbey. But in countries like the UK, where beer drinking was all too often associated with beards, bellies and bingeing, the rise of craft beer has begun to shape new societal attitudes to beer drinking. Increasingly, craft beer is seen as a luxury drink to be savoured rather than swilled. And more people are beginning to discover beer’s potential for pairing with food. Marverine Cole is a UK-based broadcast journalist and beer sommelier who believes the popularity of craft beer coincides with the current craze for all things artisanal, especially if it’s edible. “I think the renaissance of craft beer goes hand in hand with the fact that people care so much more about the quality and the provenance of their food,” says Cole. “Good craft beer – not massproduced, tasteless, corporate beer – is brewed by the smaller-scale brewers with love and passion. Their desire to create beer that looks, smells and tastes terrific, which challenges the senses and which you can enjoy with food, is infectious. I and millions of others have caught the craft beer bug and it’s not going away any time soon.” According to Cole, women represent a growing demographic among beer drinkers as beer begins to shrug off its masculine image. The appeal lies partly in beer’s relatively low alcohol content when compared to wines and

OCTOBER ISSUE 142

Luigi Taglienti

LIVING / FOOD

“I wanted to create beer that was English, but brewed by an Indian, which is the complete opposite of what the likes of Kingfisher is doing. You can actually get a better tasting product that’s brewed 15 minutes away from the taproom”

spirits. And when consumed moderately, craft beer can even be a healthy option. “Craft beer particularly becomes attractive for women when you realise there’s no gassiness, no cholesterol or fat in the drink. It’s packed full of B vitamins and other minerals,” says Cole. “Then we get into nuances of flavour. It’s easy to get tired of your favourite drink, and beer offers up a world of discovery because of the variety of beer styles. Beer is not just lager or pilsner. There are IPAs, saisons, stouts, porters, barley wines and so many more styles to explore. All of those reasons mean women are switching to beer, and making it a regular part of their drinks repertoire.” In Cole’s hometown of Birmingham, the craft beer revolution has transformed the drinking landscape. As well as some fine traditional Victorian pubs serving cask or ‘real ale’, a number of craftorientated taprooms are appealing to a new audience of curious imbibers. The Burning Soul Brewing Company occupies a warehouse in the city’s historic Jewellery Quarter, and was recently voted best new brewery in the region by the international RateBeer community. Its menu includes more than 35 handmade beers, from the Nelson Pale Ale session beer, to the robust Coconut Porter.

Just up the road is another craft brewery that’s turning preconceptions of British beer on its head. The Indian Brewery Co is a Birmingham-based craft project that challenges the multinationalowned behemoths of Indian beer. Owner Jaspal Purewal explains: “I wanted to create beer that was English, but brewed by an Indian, which is the complete opposite of what the likes of Kingfisher and Cobra are doing. People are realising that you can actually get a better tasting product that’s brewed 15 minutes away from the tap room itself, and it’s named after the city that we’re from.” Purewal’s Birmingham Lager is available at the Indian Brewery Snow

Hill taproom, alongside a refreshingly inventive menu of Indian street food. Popular dishes include Fat Naans (two mini naan breads topped with chicken or vegetables, with salad, sauces and Bombay sprinkle) and Chaat Bomb (vegetable samosas with chickpeas, yoghurt, chutney and sev topping). But while Purewal isn’t so fussy about pairing specific drinks with food, his beer is a key ingredient in some of his best dishes. “It’s the customer’s preference as to which beer goes with which food. A lot of the beer that we do is very light, so it suits the food we do anyway,” he says. “But we use Birmingham Lager infused in our Bombay chicken wings and our

OCTOBER ISSUE 142

fish and chips, which works really well.” As a beer sommelier, Marverine Cole is a keen advocate of pairing up. “When it comes to matching alcoholic drinks with food, beer wins hands down,” she says. “Wine drowns out and overpowers food. Beer can compliment or contrast flavours, or cut-through fattiness in food. Beer works with savoury dishes and desserts. There’s a myriad of combinations when it comes to beer and food matching.” Cole suggests a sturdy, rich bitter or a premium amber ale as the perfect accompaniment to a rib-eye steak with seasoned chips or fries. “The rich, dark fruit elements of both beers will stand up well to the beef and not overpower the strength of this choice cut of meat. Then I’d dive straight into a slice of chocolate fudge cake oozing hot chocolate sauce, with a Meantime’s Chocolate Porter or the limited-edition beer Black Square, a Russian Imperial Stout brewed by St Austell.” More and more Michelin-starred restaurateurs are recognising craft beer’s pairing potential. Purecraft Bar and Kitchen is a collaboration between the Warwickshire-based Purity Brewing Co (named Brewery of the Year by The Good Pub Guide 2018) and Andreas Antona, who has Michelin stars at both Simpsons restaurants in Birmingham and The Cross Kenilworth. Patrons can enjoy gourmet versions of pub food classics such as traditional Black Country pork pie and beerbattered fish and chips, alongside a zesty pint of Mad Goose pale ale or a fruity Longhorn IPA. And of course, Purecraft does its very own handcrafted version of the humble Scotch Egg, a barroom standard, which for years was cruelly derided but has found a new lease of life thanks largely to craft beer. So the next time you are in the pub, skip the big names and ask for something local and craft – you may be pleasantly surprised.

LIVING / ART

Mirroring life A photographic legend has his work displayed at Amsterdam’s Foam

ndré Kertész is one of the most revered photographers of the 20th century with his ground-breaking monochrome photographs still influential today. He is considered one of the fathers of photojournalism, although he never got the plaudits he deserved during his career. This exhibition comprises a large number of his black

and white photography as well as some colour work. Marvel at Kertész’s ability to change reality through his unusual compositions. Foam is one of the most respected photography venues in Europe and this exhibition shows why. A must visit for anyone who is going to be in Amsterdam this autumn. Foam, Amsterdam, from September 15 to December 6

OCTOBER ISSUE 142

Clockwise from opposite: Bocskay Tier, Budapest (1914), Underwater Swimmer (1917), Burlesque Dancer (1926), Mondrianâ€™s Studio in Paris (1926)

OCTOBER ISSUE 142

LIVING / COLUMN

WTF By Tim O’Reilly

echnology is going to take our jobs! Yes. It always has, and the pain and dislocation are real. But it is going to make new kinds of jobs possible. History tells us technology kills professions, but does not kill jobs. We will find new things to work on that we couldn’t do before but now we can accomplish with the help of today’s amazing technologies. Take, for example, laser eye surgery. I used to be legally blind without huge Coke-bottle glasses. Twelve years ago, my eyes were fixed by a surgeon who would never have been able to do the job without the aid of a robot, who was now able to do something that had previously been impossible. After more than 40 years of wearing glasses so strong I was legally blind without them, I could see clearly on my own. In order to remove my need for prosthetic vision, the surgeon ended up relying on prosthetics of her own, performing the surgery on my cornea with the aid of a computer-controlled laser. During the actual surgery, apart from lifting the flap she had cut by hand in the surface on my cornea and smoothing it back into place after the laser was done, her job was to clamp open my eyes, hold my head, utter reassuring words and tell me, sometimes with urgency, to keep looking at the red light. An unaugmented human being could never do surgery this sophisticated. The human touch of my doctor was paired with the superhuman accuracy of complex machines, a 21st century hybrid freeing me from assistive devices first invented eight centuries earlier in Italy. The revolution in sensors, computers and control technologies is going to make many of the daily activities of the 20th century seem quaint as, one by one, they are reinvented in the 21st. This is the true opportunity of technology: it extends human capability.

We must keep asking: what will new technology let us do that was previously impossible? Will it help us build the kind of society we want to live in? This is the secret of reinventing the economy. As Google’s chief economist Hal Varian said to me: “My grandfather wouldn’t recognise what I do as work.” What are the new jobs of the 21st century? Augmented reality – the overlay of computer generated data and images on what we see – may give us a clue. The most exciting thing about this technology is how it can change the way we work. I’m particularly fond of imagining how the model used by Partners In Health could be turbocharged by augmented reality and telepresence. The organisation provides free healthcare to people in poverty using a model in which community health workers recruited from the population being served are trained and supported in providing primary care. Doctors can be brought in as needed, but ordinary people provide the bulk of care. Imagine a community health worker who is able to tap on Google Glass or some next generation wearable, and say: “Doctor, you need to see this.” Trust me, Glass will be back when Google learns to focus on community health workers, not fashion models. It’s easy to imagine how rethinking our entire healthcare system along these lines could reduce costs, improve both health outcomes and patient satisfaction, and create jobs. Imagine house calls coming back into fashion. Add in health monitoring by wearable sensors, health advice from an AI made as available as Siri, the Google Assistant or Microsoft Cortana, plus an Uber-style on-demand service, and you can start to see the outlines of one small segment of the next economy being brought to use by technology.

“The revolution in computers and control technologies is going to make many of the activities of the 20th century seem quaint”