Gates, Yellen and CEOs of Coca-Cola, Morgan Stanley and Airbnb Speak at WSJ CEO Council Summit
Business leaders and policy makers are gathering for The Wall Street Journal's CEO Council Summit in London, with , the Covid-19 pandemic and the globe's economic challenges featuring prominently.
Treasury Secretary Janet Yellen said that although the U.S. economy and labor market remain strong, inflation is too high. She also cautioned that the European Union’s planned embargo on imports of Russian oil could drive global energy prices even higher.
Airbnb Chief Executive Brian Chesky shared his views on the future of work, predicting the end of a hybrid three-day workweek many companies are pursuing.
Bill Gates spoke earlier in the session about his relationship with Elon Musk and gave his thoughts on Covid-19 policies.
James Quincey of Coca-Cola Co. talked about how the company is working to ramp up the resilience of its supply chain and how CEOs are under pressure to speak up on hot-button issues.
And Morgan Stanley CEO James Gorman said he wouldn't be surprised by a recession.
The event opened late Tuesday, with Ukrainian President Volodymyr Zelensky addressing the summit by video link, saying global companies have a critical role to play in isolating Russia and helping Ukraine restore its economy.
The CEO of Airbnb Inc. is certain that the ideal work schedule is no more than two days in the office. The head of Morgan Stanley said no fewer than three days a week will do.
Two years into the pandemic, CEOs remain divided over how many days employees will spend in offices in a post-Covid world.
The conflicting visions for the future of work were on display Wednesday during The Wall Street Journal’s CEO Council Summit in which corporate leaders, academics and government officials sounded off on threats like inflation, supply-chain bottlenecks, and the crisis in Ukraine, while also sharing their views on the way office spaces, work schedules and companies might evolve.
James Gorman, CEO of Morgan Stanley, said he views weekly in-person work as fundamental to the company’s culture and an important way to develop people’s careers. The company has told most employees to be in the office three or four days a week, he said.
“It will not be five again—that's gone—but it won't be zero, one or two. And it won't be only Tuesdays and Wednesdays,” Mr. Gorman said. “Sometimes it'll be inconvenient and be Mondays and Fridays.”
Before the pandemic, many people would have celebrated just such a schedule, he said.
“If we'd said to people in 2019—December of 2019—two years from now, you can work from best casino sites 0 one or two days a week, people would die and go to heaven,” Mr. Gorman said. “This is a transformation in how we conduct ourselves, yet for some reason it’s seen by some people as a radical infringement on people's rights.”
Brian Chesky, the chief executive of Airbnb, said he believes the hybrid schedules announced by many employers will begin to unravel over the coming weeks. Instead of employees spending three days in the office, as many companies initially have required, Mr. Chesky said he expects workers to start coming in two days a week and as little as a single day this summer. Airbnb stands to benefit from a longer-term shift to remote work, which gives people more flexibility to travel and potentially rent property through the company.
Airbnb recently said it would let employees live and work almost anywhere with no pay cut; many employees will come together in-person as little as once a quarter.
“The three-day hybrid thing is not going to work,” Mr. Chesky said. “An office, as we know it, is kind of an outdated notion. It’s primarily, as it’s currently designed, an anachronistic form factor from a predigital age.”
Many executives said there was no shortage of issues requiring their attention, including the health of the economy. Morgan Stanley’s Mr. Gorman said he wouldn’t be surprised if the U.S. entered a mild recession in the future, noting the mixed history of previous interest-rate increase cycles from the Federal Reserve. Treasury Secretary Janet Yellen said the U.S. economy and labor market remained strong, though she said inflation is too high. Consumers are also under pressure because inflation is rising faster than wages, said James Quincey, CEO of Coca-Cola Co. “That tends to end badly,” Mr. Quincey said.
Supply-chain snarls have contributed to inflation, raising the cost of materials, with plenty of uncertainties there, too. Mr. Quincey said it is difficult to predict the effect of Covid-19 lockdowns in China. He said Coca-Cola and other companies were building up “buffer stocks” of necessary materials—a trend he said only added to supply pressures.
On the pandemic, philanthropist and Microsoft Corp. co-founder Bill Gates urged society to remain on guard against Covid-19 variants, saying scientific understanding of them remained low. Mr. Gates has argued in a recent Journal essay that the world needs a full-time, paid team to help prevent future pandemics. On Wednesday, he added that political leaders must help to disseminate accurate health information and that social media platforms play an important role.
Other issues are also bubbling up in the C-suite, including the recently leaked Supreme Court draft opinion indicating the court may be preparing to overturn Roe v. Wade. Asked whether Coca-Cola planned to follow Amazon.com Inc. and other employers that have offered to help pay for staffers to travel out of state to access abortions, if necessary, Mr. Quincey said the issue didn't currently affect the company. “The vast majority of our employees are in Atlanta, Georgia, and that's not a matter on the table at the moment,” he said.
As for how people do their jobs, Ms. Yellen said some change is likely to become permanent. Executives said the shifts under way at work now would take years to shake out, with much additional experimentation required to settle on models that worked for both employees and companies. Offices, too, must morph into more inviting spaces that will draw employees in and accommodate changing work styles, some said.
British designer Thomas Heatherwick, founder of Heatherwick Studio, said offices must become “social temples,” allowing employees to collaborate with their peers and friends at work, while also allowing for heads-down work. In one experiment at Alphabet Inc.’s Google, Mr. Heatherwick and his team built a shared work area where people can come together. Spaces can be enclosed by a sliding door, allowing people to wall off their area for focus, when needed, or to easily signal an openness to conversation with peers.
“It’s a bit like baboons showing how available they are to mate,” Mr. Heatherwick said. “You can slide your door depending on how focused you are: ‘Close the door, I’m working, don’t disturb me, I’m on a Zoom call.’ Have it slightly open, like, ‘I could be available to talk.’”
Mr. Chesky of Airbnb said the open office plan, long derided by workers as loud and unproductive, may have also outlived its usefulness. Though Airbnb hasn’t settled on any plan to renovate its spaces, Mr. Chesky said offices would need to better serve single purposes, making it easier for employees to give a presentation or design creatively.
“If we invented an office today, what would it do?” he asked. “The office of the future should not resemble at all the office of the past because the world is changing.”
More important than the physical design, though, is a cultural shift that will free people from having to regularly commute to such spaces, he said.
“The most talented people live everywhere,” Mr. Chesky said. “I think, after compensation, flexibility will be the most important benefit.”
Treasury Secretary Janet Yellen said the U.S. economy remains strong despite the fact that it shrank in the first quarter of this year, adding that both persistently high inflation and spillovers from the war in Ukraine present economic risks.
"The outlook is very uncertain. The dangers at the global level are high," she said. "I do worry about commodity prices, I am worried about spillovers from Russia and Ukraine that can have adverse impacts not just on the U.S. that is strongly positioned, but on Europe, on emerging markets."
Adding to the challenges to the global economy is the recent European Union decision to ban imports of Russian oil, she said. Oil prices jumped on Wednesday in the wake of the EU announcement.
"We need to see the conditions exactly how this is going to be accomplished because it could lead to higher global oil prices as well," she said. "But the desire to respond to Russia's unprovoked attack on Ukraine and to bring the war to an end is very understandable and important."
Sanctions on Russia have had a damaging effect on that country’s economy and the U.S. and its allies are considering additional measures, Ms. Yellen said. But she didn’t rule out that Russia could again engage with the global economy. She said that if a peace agreement were reached, there is a path to de-escalate sanctions.
Ms. Yellen spoke Wednesday at The Wall Street Journal's CEO Council Summit in London.
Airbnb Inc. Chief Executive Brian Chesky said he plans for a smaller office and expects the company to spend more on travel as the workplace evolves to employees living more dispersed.
Mr. Chesky last week told employees they could now work from almost anywhere in the world without a pay cut in a move that could entice other companies to follow suit and bolster the company’s business.
“We are going to have a much smaller office footprint and will probably spend a little more money on travel entertainment to gather people,” he said Wednesday at The Wall Street Journal’s CEO Council Summit.
The company has about 6,000 employees and they won't all be in the office at the same time, he said, reducing the need for floorspace. He said he still expects people to gather in person once a quarter to retain such direct interpersonal links.
“We’ll definitely spend less money on office space,” he said.
Airbnb’s move to work from almost anywhere sparked 800,000 visits to its career page, Mr. Chesky said Wednesday — typically over such a period it would have been less than 80,000 hits. Salaries, he said, won’t be location dependent.
The San Francisco-based company on Tuesday said it expected to post its first full-year net profit this year after its revenue climbed 70% last quarter as people continued to book suburban rentals despite hosts raising prices.
It posted $1.5 billion in revenue in the three months through March and issued a strong outlook for the current quarter.
Revenue in the first three months of the year was helped by customers booking a record number of nights and what are known as experiences during the quarter and hosts raising nightly rates because of inflation. Airbnb’s gross bookings—the value of bookings made on its platform—grew 67% to $17.2 billion, a record.
As inflation takes a toll on people’s household finances, Mr. Chesky said that Airbnb has seen a nearly 30% increase in the number of nights that hosts are making their best casino sites 0s available for bookings.
“This suggests to us they’re both more comfortable with people being in their best casino sites 0 but also maybe they have a greater financial need,” he said.
Russia is combining its cyber capabilities with on-the-ground military operations in Ukraine to help achieve its “brutal objectives” in the conflict, a senior Biden administration official said, even as Ukraine’s cyber defense has surpassed expectations.
Anne Neuberger, President Biden’s deputy national security adviser for cyber and emerging technology, said Wednesday at The Wall Street Journal’s CEO Council Summit that destructive and disruptive hacking linked to Russia had been a significant aspect of the war.
“We have seen the Russians having an integrated approach to using physical and cyberattacks, in an integrated way, to achieve their brutal objectives in Ukraine,” Ms. Neuberger said.
Cybersecurity researchers and intelligence officials have come to a consensus that Russia is joining cyber operations with tactical military operations in Ukraine as large-scale, knockout blows have eluded its hackers—or been thwarted by Ukrainian defenders.
Ms. Neuberger, a veteran cybersecurity official who has worked at the National Security Agency and is among the most influential voices in the Biden administration on cybersecurity issues, said the U.S. hadn't observed Russia’s criminal hacking groups playing a major role in the conflict. U.S. officials have said for years that Moscow’s intelligence services have enlisted such groups.
“We’re not seeing those criminal ransomware groups playing a significant role buttressing Russia’s capabilities in and around the Russia-Ukraine conflict at this moment in time,” Ms. Neuberger said.
Lindy Cameron, the chief of the British government’s National Cyber Security Centre, told the CEO Council that “ransomware remains the biggest threat…to the U.K. and specifically to U.K. business.”
Ms. Cameron also urged businesses to think twice before paying a ransom if they fall victim to an attack.
“From my perspective, the U.K. is a safer place when people don’t pay a ransom,” she said. “I want to make it difficult for criminals to make money.”
Ms. Cameron said it was important for companies to be transparent about the hacks they suffer to educate other potential victims.
“People’s willingness to be honest actually about the risk we face and what we do about is a real teachable moment for other organizations,” she said.
A mild recession in the near future wouldn't surprise Morgan Stanley Chief Executive James Gorman.
Mr. Gorman said at The Wall Street Journal’s CEO Council Summit that anticipated interest-rate increases from the Federal Reserve could cause the economy to contract. “We have had 11 rate increase cycles in the past 40 years and five or six have been a soft landing. Based on history, it’s a 50/50 proposition.”
A combination of record-low rates and record-high fiscal stimulus to combat the Covid-19 economic crisis led to strong global growth and, eventually, an overheating economy, he said.
As a result, inflation is “omnipresent” and geopolitical uncertainty driven by the war in Ukraine is on the rise. That means he expects more aggressive interest-rate increases from the Federal Reserve starting on Wednesday afternoon. “I would be stunned if they don’t raise by 50 basis points” at the next two meetings, Mr. Gorman said. Investors had expected three rate increases in 2022 at the start of the year, now they expect 10, he added. “The market has been as wrong as the Fed.”
While Mr. Gorman noted “volcanic eruptions” across capital markets, such as price volatility for energy, meme stocks and cryptocurrencies, there are reasons for optimism, he added. The backdrop of the economy is strong, while consumer and corporate balance sheets are in good shape. U.S. banks are also well capitalized, which should help the U.S. weather any economic slowdown.
Bill Gates said he is unsure of Elon Musk’s motives in buying Twitter Inc. and that social media needs to play a role in preventing the spread of misinformation.
“He actually could make it worse,” Mr. Gates said of Mr. Musk’s potential impact on the platform, speaking Wednesday at The Wall Street Journal’s CEO Council Summit. But, he said, “It’s not totally clear what he is going to do.”
In recent tweets, Mr. Musk confirmed that he confronted Mr. Gates about shorting Tesla. Mr. Gates had reached out to his fellow billionaire to discuss philanthropy in climate change, but Mr. Musk asked if Mr. Gates still had a $500 million short position in Tesla. Mr. Gates responded he hadn’t closed it out, to which Mr. Musk said he can’t take Mr. Gates’s philanthropy seriously if he was shorting the electric-car company.
Mr. Gates didn’t directly answer a question about whether he had personally shorted Tesla, saying that climate change was a focus of the Gates Foundation.
“I don't think whether one's short or long Tesla is a statement about your seriousness about climate change,” Mr. Gates said. “I applaud Tesla's role in helping with climate change." He added that if Mr. Musk "makes Twitter worse, fine, I’ll speak out about that, but I wouldn’t assume that’s what’s going to happen.”
Mr. Musk, who has supplanted Mr. Gates as the world’s richest person, has agreed to pay $44 billion to buy Twitter, saying he wants to ensure it protects free speech.
The Microsoft co-founder and global philanthropist said political leaders had a role to play in combating misinformation. “When you do not have the trusted leaders speaking out about vaccines, it is pretty hard for the platform to work against that,” he said. “We have a leadership problem, and we have a platform problem.”
“The way that you make those platforms spread truth and not crazy stuff, there’s some real invention required there, and it’s partly in the political realm,” Mr. Gates said. “I don’t have the solution to that. I hope lots of brilliant people are thinking about it, but it is a huge problem in terms of legitimacy of the elections or medical innovations.”
China’s sweeping crackdown on private businesses is aimed at making them more accountable and empathetic, echoing similar policy moves in the West, Chinese economist Keyu Jin said.
“The technology crackdown is not about driving out private businesses and hurting the billionaires,” said Ms. Jin, an associate professor of economics at the London School of Economics, in an interview at The Wall Street Journal’s CEO Council Summit.
“These companies were growing so fast particularly because they were given free rein. They were growing autonomous, semi-legally, seizing land and opportunities, and lots of legally gray areas,” said Ms. Jin, who is the daughter of former Chinese vice minister of finance and People's Bank of China official Jin Liqun.
The Journal reported last month that China was preparing to hit pause on its monthslong campaign against technology companies, as officials seek to arrest a rapid deterioration in the country’s economic outlook.
“Recently, the model for Chinese companies is be reasonable, be legal, and be empathetic,” Ms. Jin said. “Be responsible to society. Be responsible to consumers. Be environmentally responsible, but also protect consumer rights and data. Those who do not observe will be penalized.”
Supporting the tech sector could help China’s economy at a time when forecasters are rapidly downgrading their expectations for growth this year amid the spread of the Omicron variant, which has led to the monthlong lockdown of Shanghai, the country’s biggest and wealthiest city, and which now threatens to paralyze Beijing, the capital.
“China is open for business. Let's not forget that main message,” Ms. Jin said. The motivations for the corporate crackdown include “anti-monopoly, data security protection, setting up a best casino sites 0 regulatory framework for fintech companies. It is the same as the West, except China has done it faster, more heavy-handed, and more dramatic,” she added.
China said its economy grew 4.8% in the first three months of the year compared with a year earlier, though economic activity has only cooled since then as the lockdown of Shanghai and other Chinese cities wreaked havoc on supply chains, logistics networks and business operations.
Ms. Jin said China’s economy was in a very fragile state, with pressures ranging from the fight against the pandemic to regulatory crackdowns to a battered real-estate market.
“I don't think I remember the Chinese economy being, close to being in this state for as long as the last 20 years. It is a serious situation,” Ms. Jin said.
Hybrid work is here to stay and the office of the future should offer workers much more flexibility, sense of purpose and emotional connection if workers are to return, business leaders at The Wall Street Journal’s CEO Council heard on Wednesday.
“The stupid construct of the office is gone,” said Thomas Heatherwick, founder of Heatherwick Studio, which is designing Alphabet Inc.’s best casino sites 0 campus for Google in Mountainview, Calif.
Making people work from offices five days a week had infantilized workers but the pandemic had “released people from imprisonment," he added.
Companies across the U.S. are struggling to get employees back into the office, but Mr. Heatherwick warned that gimmicks wouldn’t entice them. “It’s not about whether it’s got a bean bag or a slide,” he said, but about whether the space provided makes its workers feel that the organization is meaningful and what they are doing there is important.
“The workplace has to be this incredible injection of purpose,” Mr. Heatherwick said.
In the discussion with Lynda Gratton, professor of management practice at London Business School, CEOs heard that it would be very difficult to attract top talent back to the office full time because during the pandemic and enforced working from best casino sites 0, people had reevaluated their lives and priorities.
“Hybrid work, certainly for the knowledge worker is going to be here to stay,” Prof. Gratton said.
Highly talented people who don’t need that flexibility are a very small group of people, she added, and would demand higher wages. They also might not add to the diversity of the workplace, she warned.
Both speakers emphasized the need for companies to provide spaces for workers to collaborate, feel valued and have friends. “Right now highly talented people have a huge amount of power with regards what they want” from companies, Prof. Gratton said.
Both speakers also spoke of the need for offices to provide spaces for collaborative as well as focused work.
At Google, Heatherwick Studio is testing out using sliding doors between desk spaces so workers can indicate whether they are available for conversations by how open their doors are. “A bit like baboons showing how available they are,” Mr. Heatherwick said, but the space also has a long table where employees can collaborate when necessary.