Sam Altman’s Brave New Worldcoin

Plus: CEO pay cuts aren’t cutting that much. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

July 25, 2023

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Good morning.

Beware where you bite, Trader Joe’s shoppers. The extremely friendly grocery chain has issued a recall on two of their delectable cookie labels — Almond Windmill Cookies and Dark Chocolate Chunk Cookies — due to the possible presence of a foreign substance: rocks. That seems like a perfectly solid reason to us, and likely not at all what the smiling cashier means when they remark, “Ooh, those are dangerous!” at the checkout line.

Remaining stock from the recall period should be removed from sale or destroyed, the company said in a statement. That’s the way the cookie crumbles.

Morning Brief

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Crypto only has eyes for Sam Altman.

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Executives can’t quit voluntary pay cuts.

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The US needs China to stomp out illicit drug trade.

Cryptocurrency

OpenAI Founder Launches Eyeball-Scanning Cryptocurrency

The AI hype generated by Chat-GPT has given Sam Altman the Midas touch. How did that story end again?

Worldcoin, a new cryptocurrency cofounded by Altman, launched on Monday. It had a robust first day of trading, with investors clamoring to join a venture associated with the success of OpenAI via Altman — and that’s despite the fact that Worldcoin cannot yet operate in the US and requires people to physically scan their eyeballs to use it. Still, investors wouldn’t go for a patently absurd token just because it’s associated with a famous tech CEO, right?

Alt(man)Coin

Worldcoin has been trundling along for the last three years, although Altman told Bloomberg in 2021 that he first dreamt it up in 2019. The idea was that it could be used to achieve universal basic income, essentially eradicating global poverty through cryptocurrency — though a 2022 investigation by MIT Tech Review painted an image of the company as exploiting nations with high rates of poverty. Despite the grand (some might say delusional) scale of the project’s ambitions, it attracted big-name investors including Andreessen Horowitz, LinkedIn founder Reid Hoffman, and the then-untarnished Sam Bankman-Fried.

Worldcoin’s most distinguishing feature is that to use it, you have to prove you’re a human and not an AI bot by having your iris scanned by a device called an “orb.” On Worldcoin’s site, there’s an option to “schedule orb visit” and find the nearest place to have your eyeball scanned and your identity verified:

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The company has 11 orb sites in the US, even though Worldcoin tokens aren’t yet available in the country due to heightened regulatory scrutiny of the crypto market. In an interview with the Financial Times, Altman struck a fairly blase tone when talking about the initial exclusion from the US, saying, “I’d say there’s 95 percent of the world’s population not in the US. The US does not make or break a project like this.”

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Altman conceded in the same interview that some potential adopters might find the eyeball-scanning element off-putting, calling it “a clear ick factor.”

Orb Ponderers: The technicians who’ll help people log their iris scans are called orb operators, and Worldcoin’s website makes the application process look like a quick, easy, gig-economy-style job. The company already deployed orb operators across the globe in the runup to launching its token, getting people scanned and signed up to Worldcoin in advance, but it was far from a smooth operation. Orb operators told BuzzFeed last year the tech didn’t always work; the system could be gamed to register the same person twice, and one operator said his orb took months to arrive and when it did, it was prone to overheating. Let’s hope Worldcoin has ironed out those kinks.

– Isobel Asher Hamilton

Corporate

Executives Are Still Taking Pay Cuts. Sort Of.

(Photo by Tima Miroshnichenko via Pexels)

The pandemic may be over, but C-suite types still suffer from one long-haul side effect: voluntary pay cuts.

The Covid-era “we’re all in this together” salary-slashing show of executive solidarity has extended into 2023’s economic uncertainty, according to a new analysis from The Wall Street Journal. But when it comes to corporate top dogs, one’s salary and one’s compensation aren’t necessarily synonymous.

Pay Day Woes

CEO salary cuts were not exactly typical prior to the pandemic. But with the coronavirus’ wave of existential angst, the practice became much more normal. Some 20% of companies on the Russell 1000 instituted leadership pay cuts in 2020, according to Just Capital, a nonprofit research firm focused on corporate equity. And those pay cuts extended beyond CEOs to include CFOs, corporate attorneys, and other top execs. “If you do the wrong thing, this is an invitation to shareholder activism and lawsuits for years,” Aaron Bertinetti, senior vice president of proxy advisory firm Glass Lewis, told the WSJ in April 2020 regarding executives who continued to receive hefty salaries in the pandemic’s early days.

Today, executives at firms like Intel, Micron, and Seagate are still taking base-pay buzzcuts, according to the WSJ. But experts say that’s a big difference from cutting compensation overall:

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When Zoom CEO Eric Yuan announced the company would lay off 15% of its workforce, or roughly 1,300 employees, he also announced a 98% base salary cut to his own paycheck for the coming fiscal year — from roughly $400,000 to $10,000 — with other executives taking cuts up to 20%. But even his regular wage still only accounted for less than 1% of his total $76 million yearly compensation, mostly made in long-term stock awards.

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Overall, base pay at 300 major US public companies accounted for just 11% of CEO’s total compensation in fiscal year 2022, according to Korn Ferry research.

We’re Just Like You: “Taking a 25% cut on base salary is truly more of a symbolic kind of action than it is a real significant economic action,” Don Lowman, an executive compensation adviser at Korn Ferry, told the WSJ. “It is very much intended to be a message to the outside world, as well as to employees: Our executives are sharing the pain that we’re going through.” They must just hope those employees don’t read accidentally about stock rewards and annual bonuses in the business section.

– Brian Boyle

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International

US Mulls a Quid Pro Quo to Enlist China in Opioid Fight

The US and China don’t agree on many issues — military expansion in the South China Sea, Ukraine, sanctions on semiconductors, and the proliferation of TikTok, for starters.

But these frenemies might come together on at least one thing: the fentanyl drug trade.

Pusher Man

The highly lethal synthetic opioid is 50 times more powerful than heroin and 100 times stronger than morphine. Of the 107,000 overdose deaths in the US last year, nearly 70% were a result of fentanyl use, according to the Centers for Disease Control. Mexican drug cartels often receive much of the attention for the US opioid epidemic, but the Drug Enforcement Administration considers Chinese chemical companies the primary source for both fentanyl and its chemical ingredients.

US Secretary of State Antony Blinken broached the drug trade last month when he visited Beijing, and now the two nations could join forces to fight the crisis, sources told The Wall Street Journal. But China is looking to use some leverage:

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The US has technology sanctions on the Chinese Ministry of Public Security’s Institute of Forensic Science for its alleged role in mass surveillance and human rights abuses against Uyghurs and other minority groups. Chinese officials say the sanctions hurt its ability to stop drug traffickers and wants them lifted if the US wants its help.

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China also refutes the idea that it’s linked to the drug problem in the US. Instead, its officials argue that America’s issues are domestic and that Washington has lagged on prosecuting homegrown prescription drug companies as well as raising awareness about the dangers of opioids.

Easy Come, Easy Go: Whenever tensions calm between the US and China, the era of good feelings only lasts so long. Just last month, the Department of Justice indicted a slew of Chinese chemical companies and executives with conspiring to manufacture fentanyl and related chemicals that would then be distributed in the US. Two employees were arrested by DEA agents after being expelled from Fiji, a move that China condemned.

– Griffin Kelly

Extra Upside

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Doll house: “Barbie” wins biggest box office debut of the year.

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Knock, knock: IRS ends practice of unannounced taxpayer visits.

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