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Zoetis CEO on equalizing the work experience for in-office and remote employees

On this week’s episode of Fortune’s Leadership Next podcast, co-hosts Alan Murray and Ellen McGirt talk with Kristin Peck, CEO of Zoetis, about pandemic puppies, what it was like to take over the company two months after “the world shut down,” and Zoetis’s work to help create “more sustainable agriculture around the world.” They also discuss how much CEOs should step into the fray on political issues. “I think it’s important that companies try to stay out of the fray, but stay principled to their purpose,” Peck said.

Listen to the episode or read the full transcript below. 


Alan MurrayLeadership Next is powered by the folks at Deloitte, who, like me, are super focused on how CEOs can lead in the context of disruption and evolving societal expectations. Welcome to Leadership Next, the podcast about the changing rules of business leadership.

I’m Alan Murray and I’m here with the G.O.A.T. of co-hosts, the greatest of all time, Ellen McGirt.

Ellen McGirt : Alan, you’re working in the animal puns. That is fantastic. Well done. I did not see that coming. You know, I love these introductions. They are my favorite part of my day. But here’s the thing that I love even more and I know that our listeners can’t see this of course but you are actually live in person with our amazing guest today. I’m so sorry I can’t be there.

Murray:  I am. I think it’s the first time this has happened since February of 2020. I am in our lovely padded podcast room and very excited about it.

McGirt: Well, you know, who also should be there today, are your amazing dogs who, anybody who’s been on a Zoom call with you in the last two years have met and fallen in love with. I’m sorry, they’re not there.

Murray:  I’m sorry they’re not here too. I haven’t been able to convince this building in Manhattan to let them in. But our guest today is Kristin Peck who is the CEO of Zoetis. It’s a Fortune 500 company, makes medicine, vaccines, other products for household pets and livestock. And Cooper and Remy take her medicine once a month for ticks, fleas and heartworm. So I’m very familiar with the company and the product. Big company by the way, Ellen. Market valuation of over $70 billion. Sells about $7 billion a year in product.

And Kristin, we’re very excited to have you here and you must have pets right?

Kristin Peck:  I definitely have pets. It’s great to be here. Thanks so much for having me.

Murray:  Just quickly, tell us about your pets.

Peck:  Okay, so I have two dogs and a bird. Although I would say I have a lab rescue named Poppy, who’s about 12, and then I guess it’s a dog but I call it a barking cat, Sky. Mostly because it has the attitude of the cat and it’s got the, you know, the hunting skills of a dog and Sky is a mix, sort of like a cavachon.

Murray:  And how does Sky feel about the bird?

Peck:  You know, believe it or not, I think Sky and the bird have a quite interesting relationship. I think if the bird ever, you know, got out Sky would for sure chase it but Sky is very intrigued by the bird. I don’t know how I feel about the bird but the bird definitely likes Taylor, so…

Murray:  I don’t want to get too lost in that because we have a lot to talk about. We’re going to talk about global food shortages. We’re going to talk about the future of work. We’re going to talk about the power of purpose, which I know is one of your favorite topics. But before we do any of that, I want you to tell us about pandemic puppies.

Peck:  Yes, so I’m very grateful for all those people out there who adopted pets but clearly not as grateful as some of them. So what we saw in 2021, in particular, was about a five to 10% increase in the number of pets and you know, most of everybody, has a friend or a family member who has a pandemic puppy or a pet. And really a lot of those pets were adopted by millennials. So their are real changes, a lot of people getting more than one pet so obviously it was great for business for us. It led to our best year ever. But I think really the bond between human and animals became even deeper during the pandemic.

Murray:  There was some fear that if people started to go back to work, some of those pets would be abandoned. Have you seen any of that?

Peck:  I have not. We actually as a leadership team just did a volunteer day at St. Hubert’s [Animal Welfare Center] in New Jersey, and we’ve been asking most of the shelters, both my children actually volunteer. They have not seen that, you know, we were expecting it. Their rates are about what they used to be. And we think really the reason there is that most people who adopted them already had a pet. And you know, I know you want to bring your pets to the office, as you mentioned, but most people aren’t coming back five days a week, so they’re still spending a lot of time home with their pets.

McGirt: I have a quick question about how people interacted with veterinary care during the pandemic. What did you see happen with veterinary telemedicine? Was that a breakthrough?

Peck:  It’s a great question. In the beginning, we thought it really was going to be a game changer. It was a little bit more of a challenge in the veterinary space than in the human space, because it’s regulated by the state as whether or not you can have your first appointment online. What we’ve seen is it’s really been a nice addition but it hasn’t been a game changer.

What really was was curbside check-in. So if anyone who has a pet probably remembered, you know, you just pulled up,  you dropped off your pet and you came back an hour or two later when the pet was ready. And I think that allowed them to ensure you know, a safe environment for their staff and for the pet owners.

Telemedicine has you know, become important but it’s not at the same level as you see in human health. Primarily because it’s harder to ask a pet how they feel. You kind of, not seeing the pet can be a challenge. I do think there’s still opportunities for it and it will grow over time. But it wasn’t what we saw actually in human health.

McGirt: So interesting. Although it’d be very entertaining for my vet to watch me attempt to give my cat a pill. I feel like it would…

Peck:  Yes, pilling a cat is…you wouldn’t be the only one.

McGirt: Can we talk about your early days as a CEO? As you know from your work and your advocacy, there are way too few women in the top spot at companies so it’s a very big deal. And you had only been there for a short period of time when the world shut down. Can you talk to us about how your 100 day plan changed and what some of the breakthroughs or innovations that may have come from that?

Peck:  My predecessor was an absolutely wonderful gentleman, Juan Ramón Alaix, and he was the role model for what I thought a CEO,  a beautifully formal, you know, great communicator, warm person. And I thought that’s what were the expectations for me. I imagined my first year traveling the world visiting my sites. We’re a very global company. Half our businesses is outside of the U.S. And I did, you know, I took over in January 2020. I had about, not even two months before everything changed and where the plans had to change. We had to pivot as an organization. It was, you know, for every CEO whether you’d have the job or not, no one had a playbook. But in certain ways, you know, maybe I’m a frustrated optimist, but it allowed me to rewrite the book on what it was going to be like for me to be a CEO and to lean into styles that might have been more comfortable for me but not what I thought my colleagues expected or what I thought the world expected of me.

I was a working mom with two kids at home and very soon I had one with serious medical issues and it was hard to separate during those early months in March, April, May and June being a working mother with being a CEO. And I think it helped me relate to where my colleagues were, and to prioritize what mattered probably faster than I would have expected. I was very connected with colleagues interestingly, more than I probably would have been had I traveled the world.

Murray:  Did you talk about it at work?

Peck:  I did. And not initially, because I thought that I was supposed to be…

Murray:  That’s not what people did before.

Peck:  Yeah. I thought I was supposed to be the everything goes really well in my life. I you know, but like, you know, I started realizing what people were struggling with was creating routine for their family. So I started doing posts on LinkedIn. Here’s the schedule we put on the chalkboard in my kitchen. You know who’s cleaning the toilets? When are we eating? What are we going for a family walk? And the more I did it, the more I saw my colleagues really respond well to it. And it was you know, my big thing was we may all be in the same storm, but our boats are pretty different. So let’s find out what your boat looks like. You know, are you single at home and you’re lonely? You know, are you managing very young kids? Are you worried about your parents? What was it that was making it challenging for you and how as the CEO could I create policies, benefits and leadership that supported you? Because we needed, the thing was the pets still needed care. And the farm animal still needed care. So I still had to be able to operate a company and engage colleagues.

You know, as you pinpointed, that’s a big change in the way CEOs act—men and women—showing vulnerability, projecting more empathy. Do you think that’s just a was a temporary phenomenon related to the pandemic or do you think that’s changed is going to continue?

I think the change is going to continue partially because the workforce is evolving. So I look at our workforce today, 50% of our colleagues are millennials and their expectations of the values of their company, the engagement of their leaders, hey want to work for a place where they think the company and their leadership share their values. And so I think what you’re seeing is their expectation is they want people who are more empathetic, who really engage with them in a very different way, communicate in a different way.

So, look, I think every leader has to find what works for them. And where their comfort zone is. And as long as they’re vulnerable and authentic, and that really has to do with how authentic that is. I mean, we’ve all seen the ones who throw it out there and didn’t seem so authentic. And we you know, people certainly judge those. So I do think it’s an opportunity for leaders to, whatever is their full self, to bring that and people sense if that’s, you know, if they’re hearing what they’re seeing.

McGirt: So let’s pivot. I’m curious how you’re thinking ahead and planning ahead for what might be coming next. We’re seeing climate change accelerate. We’re seeing disease and other disruptions related to weather increasingly impacting human life. Certainly animal lives, certainly livestock lives. How do you think about the long-term future and the kinds of investments you need to be making now.

Peck:  Sure, I think one of the things that has, you know, always driven Zoetis is our purpose, which is to nurture the world and humankind by advancing care for animals. And that means really bringing disruptive innovation to the market, because healthier animals on the livestock side are more sustainable animals. So we really think about how do we contribute to a world of the livestock side where we can help animals be healthier, because a healthier animal is more efficient and it’s better for the environment. Because as you look to the future, there’s 8 billion people today it’s expected there’ll be about 10 billion by 2050. That’s 2 billion more people that need to eat healthy food with less resources, hopefully, then we’re using today to produce the food that we’re using. And so we feel a real responsibility when we look at the livestock side is how do we help create that environment and that’s partly by being able to genetically decide which animals are going to be healthier and breed the ones that are less likely to get disease, making sure we better understand which animals do better in which environments and then vaccinating, them keeping them healthy so you don’t use antibiotics, because sick animals are using resources but not gaining weight.

But it’s the same on the pet side. We say that if you look back about 30 or 40 years, the pets were in your backyard. Then they entered your house and now they’re on your bed and millennials feel even more attached to their animals. So where’s the world going? How do we create products and services and diagnostics that help us as we look to the future, have a deeper relationship with pets, keep them healthier, and for livestock create a more healthier sustainable food supply? And, you know, I just got back the last time I sat down with you, Alan, from Africa, and we’re partnering with the Gates Foundation there to figure out how we can create more sustainable agriculture around the world. So they can produce food closer to them, that’s better for the environment, and that’s ensuring they have access to products, most importantly, access to training. What does it take to keep an animal healthy? And diagnostics so they know the diseases they’re treating for and they’re only using the products that are going to be effective versus not knowing and throwing everything at the animal which, again, isn’t good for the environment and isn’t necessarily good for the animal either. So we do feel a true responsibility to help create that future.

Murray:  There is kind of this great cow debate going on, right? Where certain people who care about the environment, who care about sustainability, think cows are bad. It just takes a lot more resources to feed a person through beef and it has a big effect in terms of methane emissions. How do you think about that? What’s your view of the role of cows in the environment?

Peck:  Sure. You know, I think as you look at the important role that milk plays in the health of human beings around the world, and meat, I very much respect anyone’s choice to eat however they wish. I do think to think that you’re never going to have cows is probably you know, not a realistic and my responsibility is to ensure that I can keep cows as healthy as possible, and I can find more sustainable ways of raising them. And that I can limit the methane emissions and the footprint. And there’s lots of articles that say, you know, a world where you fully move to pure agriculture without animals is no more sustainable but we need to find a different way of coexisting and it is our responsibility to work with producers around the globe, to figure out what that looks like. And we take that very seriously. But I think the belief that the world isn’t going to be eating any animal protein, first of all the data doesn’t support it and if you look at what it’s going to take to feed the world, we’re going to have to figure out how to raise everything more sustainably. And over time, it may be that, you know, people move over long time I mean, 10 20 30 years, more to poultry or to fish, but I don’t believe a world, I’m not imagining a world where you’re not going to have a lot of cows out there. Producing the milk and meat that we need.


Murray:  I’m here with Joe Ucuzoglu, who is the CEO of Deloitte US and has the good sense to sponsor this podcast. Joe, thanks for being with us. And thanks for your support of our second season.

Joe Ucuzoglu:  Thanks, Alan. Pleasure to be here.

Murray:  Joe, we talked about technology adoption accelerating in 2020. But at the same time, it also seemed last year like there was an increased focus on people, on human capital. Can we hope for a future where we have both more technology and more humanity all at the same time?

Ucuzoglu:  I’m particularly energized leading a large professional services firm where people are at the core. This is all about marrying great people with innovative technologies. It’s not about replacing one with the other. It’s allowing people to free up more of their time to do what humans do best. The technology is an enabler for great people to use their creativity, their complex judgment and decision-making skills. But at the same time, I think we have to recognize that getting this right definitely requires a new kind of corporate leadership. I would say out with the autocratic, all-knowing CEO sitting in the corner office, and in with those who bring vulnerability, empathy, humility, those are such critical attributes to unlocking the creative talents of the workforce in such a dynamic economy.

Murray:  It is very different when you’re trying to get a group of creative people to solve a problem than when you’re simply giving orders and telling them what to do.

Ucuzoglu:  It requires a brand of leadership that places a premium on instilling values, instilling principles, and empowering people to be able to make those judgments on the front line, instead of waiting for some checklists or waiting for some prescriptive order from corporate that spells out exactly how each of those decisions need to be made.

Murray:  Joe, thank you.

[End music]

Murray:  So the Russian invasion of Ukraine has put severe stress on global food systems. I wonder what you’re seeing and what you’re doing to address that.

Peck:  It is a real issue as you look at the effect of the inability to get significant exports out of, particularly Ukraine, but partially Russia as well. It’s about 20% of the calories that the world needs come out of there. And it’s a much higher percentage for people in Africa and specifically sub-Saharan Africa. And you know, when I was down there in Uganda with a number of members of my leadership team, figuring out how you can create more sustainable production, closer to home where there’s less dependence on some of these major green export markets, other food sources, has been really important. It’s something we’re really focused on and as we look at our foundation at Zoetis, investing and ensuring that we can create more sustainable agriculture closer to home around the world, not just in Africa, but in many communities around the world. I do think as you look at the war in Ukraine, we’re quite focused as we should be on energy and fuel. But I do think the food crisis and ensuring we can help support not just Russia but also colleagues in Ukraine, but colleagues who are dependent on the food that’s coming out of there around the world is going to be an increasingly important part. And I think many CEOs are now starting to focus on that

McGirt: Kristin, you mentioned sustainability and harmonious interactions, and ecosystem health. All of these things that we’re talking about are increasingly a part of what leaders and CEOs are talking about when we think about stakeholderism, stakeholder capitalism. I know this is important to you. I know you think about this a lot by virtue of your role in the Business Roundtable. Could you give us a report card or pulse of how you think this is all going? I know that we’re talking about it a lot, and I know that we’re spending a lot of time talking about metrics and measurements. How do you think things are going?

Peck:  My view is stakeholder capitalism is investing in creating value for the long term of companies. I don’t think it’s a fad. I don’t think it’s going away. I think it’s what any responsible CEO is doing. I firmly believe, for example, that your colleagues have to come first. If you’re investing and engaging your colleagues and creating an environment, you’re going to attract the best talent. The best talent will deliver the best performance, will make sure that your customers are taken care of. And they want to work for a company that is going to take care of the environment, that’s thinking about the problems ahead. And that’s investing to succeed not just today, but tomorrow. I, you know, I think a lot of people and I know you write about this all the time Ellen in the CEO Daily, and I read in Fortune, there’s a lot of talk of will this pass as we hit a recession? And I don’t think it will, it certainly won’t for us. You know, we put our metrics out there and those metrics are around creating value. They’re not because we’re a charitable organization. [inaudible] At the end of the day when I sit down with our large shareholders. That’s what they’re asking: What are you doing to invest in the future? Where is innovation going? And that is, as I look at the environment, creating a place where my colleagues feel engaged. These are all really important things and being a company my customers want to do business with. And by the way, I have very varied customers across the political spectrum, but they want to know, my customers in a rural area know that consumers care where their food came from, and they’re going to want to invest in that. So I think it’s here to stay. And I you know, I can’t speak for every CEO but when I go to BRT meetings or other CEO gatherings, it is what CEOs are focused on.

Murray:  What about the growing political backlash, the you know, charges that you’re a bunch of woke CEOs and you’re engaging in politics and you should stay out of it? You now have the state of Texas actually, you know, is talking about passing laws to prevent BlackRock from it investing in the state because of its ESG principles. How do you think about this politicization of the issue?

Peck:  It is really challenging in markets, even beyond the U.S. around the world. I think we’re more divided in any given country that I visit or that we operate than we’ve ever been before. I don’t think it’s the job of CEOs to take sides. It’s the job of the CEO to say what matters to their colleagues, their customers and their industry, and to support policies and programs that do that. It’s hard, sometimes, you know, to have someone accuse you of different things, you know. As a member of the BlackRock board, I obviously fully support, you know, BlackRock’s position. I don’t agree with the state of Texas on this. But it’s hard sometimes not to have our opinions or our policies be brought into it. But I think you’ve got to make sure that you stick to what matters to your company, that you can clearly articulate how it relates to the purpose your colleagues and your customers if you’re going to take a stand. It’s challenging, but I think it’s long beyond the U.S. I mean, I was in Chile, and [inaudible]. I think whether or not you’re in Brazil, Chile, Europe, this division is really important and I think it’s important that companies try to stay out of the fray, but stay principled to their purpose.

Murray:  Yeah, it is difficult. I mean, politics has become more and more about taking positions and business people like yourself just have to be practical and solve problems to do what’s right for the company. I want to change the topic a little bit to one that I know you’ve thought about a lot and care about a lot. We have a lot of people on the show whose employees primarily work in offices. That’s not the case for you. So how are you thinking about post-pandemic work, and how the rules of work have changed?

Peck:  I do think fundamentally, the rules have changed. I think colleagues of all different types expect different things from their employers today than they did before. We did implement policy at Zoetis called empowered flexibility. And that was for all colleagues and it looks different for jobs. But the concept behind it is, you know, all colleagues should be able to have flexibility wherever they can to do their job, but it starts with what does my team need? What is the business need? What is the customer need? And what do I need? And what that looks like is going to be quite different. I operate in labs, for example, R&D Labs, where you have to do the experiment in person. So maybe that’s four days intensely and one day where I write up my reports. We have lots of manufacturing workers that produce products, distribution systems. You know, maybe that’s the ability to get one day a week, you know, switch your shift around so that you can attend a doctor’s appointment or go to take care of your parents. We have to imagine it differently. We had our best year ever in a world where wherever colleagues were office based or you know desk based. They worked from home so I think it starts with trusting your colleagues. But it’s having a real conversation about why and being intentional about why we’re in person versus when we’re not. But recognizing that I have 40 to 50% of my colleagues that are always going to be, you know, in sort of what I call deskless jobs where physical presence is required. And a field force that has to be out on farm or out in clinics all the time caring for animals and supporting their customers. So it’s not the same as companies who run fully desk space. And so, to me, it starts with engaging your colleagues and to the pandemic, our engagement rates have been 80 to 89% for 2020 2021 and 2022.

Murray:  Just to be clear at your company, everyone will come out of the pandemic with more flexibility than they had going into it?

Peck: Correct.

McGirt: When I when I think about the future of work, I’m worried that women and people of color are just not going to be there. The pandemic was just bonkers for women. I mean, you shared it with your own personal story with your kids at home as we shut down. And I just see it across the board, particularly for lower-wage earners. We’re losing them, they’re leaving the workforce and they’re going to be gone forever if there aren’t bigger interventions. So what’s your best advice? Or how do you think about the kinds of policies or leadership required to meet the needs of women, especially working moms and other represented groups going forward?

Peck:  Ellen, I share your your concern on this topic for a few reasons. One, I think as you look at the number of women we lost to the workforce over the last two to three years, really concerns me. It concerns me because if you’re taking out 50% of the talent base you know, you just don’t have the quality of what you have to look at. It’s also really important as, you know, I’m on the board of Catalyst as well, supporting, you know, women’s economic success and minority economic success is absolutely critical. Part of what we’re trying to do is offer that flexibility because what different women and minorities want is actually quite different. Some people found the ability to work remotely in boxes on a screen very equalizing. My concern though is if those people largely stay at home and other people come back, do you create a disequal world where those that come back and are in the office get more attention and their careers move faster then those people who for family reasons, whatever still are in, you know, working from home? And I think we’re learning as we go, I think what we know now will evolve is for example, we now make a rule even if half the people or three quarters are in a conference room, they each have to be in a box.

Murray:  So you bring your computer in the conference room, use the room note the audio system…

Peck:  We use the room audio system, so no one has audio. It forces people to look at the computer screen, so they don’t feel like they’re missing out and the people in the room aren’t focusing on each other and not on the screen.

Murray:  I think that’s really, I mean, we’re talking tactics here but it’s a really effective tactic. We do that sometimes and I’ve found that now after the meeting, I can’t remember any longer who was in the room and who was on the computer because because it is equalizing. Are there other tactics like that that you’ve adopted to help ensure that we don’t move into a world where the people at home become second class citizens?

Peck:  I think it’s just constantly talking about it being clear that I don’t see either one is better or worse, that we need to back back then for some people, they really want to be in the office. It works better for them. Actually, some, you know, mothers or fathers with very young children want to be in the office. And so the key is saying there’s certain meetings we’re going to do in person and being clear about what those are. But if not, there is nothing that’s better or worse, and then we just have to run talent processes that ensure that we do that.

I think it’s going to evolve over time. I also think, you know, we’ve increased our diversity statistics significantly, we’ve increased women in leadership positions 3%, people of color by 2.5% since 2020. So through the pandemic, we’ve improved all of our numbers, but it’s being intentional about that intentional on you know, ensuring slates for all jobs are diverse, and also interview panels are diverse and really thinking about job requirements. I think that’s another thing we’ve really got to really look at: what does it take to really succeed at the job do you need every degree that you said you needed? How many years of experiences you really need to get these jobs? So we’re being super intentional about it. And as a result, we’re keeping high engagement and we’re attracting more diverse talent to our roles.

McGirt: So you know, you are really busy board member and you’ve got such an impressive resume. I was curious if you could talk a little bit about how board service has changed or is changing? What that might mean for somebody who’s qualified in all kinds of ways but who may have been overlooked in the past? How should they prepare to join a board or contribute in that way?

Peck:  I really enjoy being part of a board and I think it’s been critical to my development. And I strongly encourage my leadership team at Zoetis to search out board opportunities and I support them in trying to find them because I think it helps you understand that many of the issues that we face as CEOs and senior leaders are very common across, whether it’s customer experience, the future of work, cyber, it could be ESG, they’re all very common and learning from other people. And to me, it’s supporting the company that you’re on the board of, but also learning from your other board members, how their companies are approaching it and hearing different perspectives about doing that. So I think it’s really important. I think it’s getting harder to be a board member the expectations of the topics you need to spend time on, that you need to get up to speed on, it is a significant commitment. You know, our policy at our company is no more than one board because to do it well takes a lot of time.

Murray:  You know, I was having this conversation with a group of directors yesterday. I think one of the things that probably needs to change, the standard for board positions a few years ago was, I want a retired CEO, you know somebody who has actually been in the job but isn’t doing it anymore so they have the time to give to my company. And the problem with that is, and Ellen and I talk about this all the time, is things are changing so fast past, a CEO who retired five or 10 years ago is really out of touch with what’s happening out there. And you’d be better off having somebody who’s in the fray.

Peck:  Well to be honest, that’s the board member I just added. I felt exactly the same way that you did, and so did our board, which is some of the challenges that we’re facing the pandemic, you name it, the war and we were really excited to add Vanessa Broadhurst from J&J to our board, who’s a current executive there, because the advice that I had during the pandemic of picking up the phone and calling Frank D’Amelio at Pfizer and saying, how are you handling the supply chain issue? I’m struggling with this. You know, what are you doing about that? It was so valuable to me to have someone on my board who was struggling with some of the same issues and in between board meetings to be calling and checking up on these issues. So I think the point that you’re raising of really being more open minded to C-suite executives are currently operating. More boards are finding value in that and honestly, on BlackRock, we have a lot of them and it’s such a valuable part of the discussions we have.

Murray:  It’s good to hear. Before we let you go, we’ve got to go back to pets. The last three years have been sort of crisis on top of crisis on top of crisis and one of the crises has been a mental health crisis. The numbers that come out of companies, the percentage of employees who have been disturbed by the events of the last three years by isolation, by whatever risks, the people they’re caring for, it’s huge. What do we know about the value of pets in human mental health?

Peck:  They’re incredibly powerful. So I think your intuition is dead on. We support something called HABRI, the Human Animal Bond Research Institute, that’s actually quantifying the benefits and the clinical significant benefits for not just mental health, but cardiovascular health. But as you look at mental health, for example, it gives people purpose. You know, I have a 99-year-old grandmother and I will tell you, she’s alive today because, getting up every day to walk her dog gets her walking thinking about the cardiovascular, knowing she matters, knowing that animal lives or dies based on whether or not she cares for it. I think as you look at why so many people adopted pets and have kept them is that like, they don’t judge, they’re happy to see you when you get home. They want to snuggle with you. You know that they depend on you and that if you don’t get up and do things, that they’re not going to be okay. I think it has incredible mental health benefits. But there’s also, we believe, the physical benefits so much so that we’re starting a movement to try to ensure that flexible spending accounts can cover veterinary care, because we believe the ability to care for your animals medical care is critical to your emotional mental health.

Murray:  That’s great. Thank you so much. And thank you for keeping my dogs healthy.

Peck:  Thanks so much for having me.

Murray: Leadership Next is edited by Nicole Vergalla, written by me, Alan Murray, along with my amazing colleagues, Ellen McGirt and Megan Arnold. Our theme is by Jason Snell. Executive producers are Mason Cohn and Megan Arnold. Leadership Next is a production of Fortune Media. Leadership Next episodes are produced by Fortune‘s editorial team.

The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.

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Intel’s Mobileye self-driving tech unit files for an IPO in what may be among this year’s biggest market debuts

Intel has filed for an initial public offering of its self-driving technology business, Mobileye Global Inc., braving the worst market for new US listings since the financial crisis more than a decade ago. 

The company didn’t disclose terms of the planned share sale in its filing Friday with the US Securities and Exchange Commission. Mobileye will continue to be controlled by Intel after the IPO, according to the filing.

Intel expects the IPO to value Mobileye at as much as $30 billion, less than originally hoped, Bloomberg News reported this month.

If the listing goes ahead this year, it would be one of the biggest US offerings of 2022. Currently, only two companies have raised $1 billion or more on New York exchanges since Jan. 1, compared with 45 in 2021. This year, the US share of IPOs has shrunk to less then a seventh of the global total from half in 2021.

Mobileye would also be following in the tracks of Porsche AG’s market-defying IPO in Frankfurt this week. That €9.4 billion ($9.2 billion) listing is the world’s second biggest this year and the largest since stock markets began their volatility- and inflation-driven downward spiral in January.

Intel Chief Executive Officer Pat Gelsinger is trying to capitalize on Jerusalem-based Mobileye, acquired in 2017 for $15 billion, with a partial spinoff of its shares. Mobileye makes chips for cameras and drive-assistance features, and is seen as a prized asset as the car industry races toward fully automated vehicles.

EyeQ Shipments

Now with about 3,100 employees, Mobileye has collected data from 8.6 billion miles on the road from eight testing sites globally, according to its filing. the company says its technology leads in the race to shift the automotive industry away from human drivers. It’s shipped 117 million units of its EyeQ product.

Mobileye has been a particularly bright spot for Intel and has consistently grown faster than its parent. As of July, it had $774 million of cash and cash equivalents. In the 12 months ended Dec. 25, it had a net loss of $75 million on revenue of $1.39 billion.

The company said it plans to use proceeds from the IPO to pay down debt and for working capital and general corporate purposes.

McCaskill, Huntsman

Mobileye said in its filing that its board will include Gelsinger as chairman, and also former US Senator Claire McCaskill, a Missouri Democrat, and Jon Huntsman, the former Republican governor of Utah as well as ambassador to China who is now on Ford Motor Co.’s board.

In its filing, Mobileye noted that it acquired mobility and transportation business Moovit from Intel this year. Moovit, another Israeli-based business, had been acquired by Intel for $900 million in 2020.

A successful Mobileye listing could break the ice for an array of startups that have been waiting for the year’s market tumult to ease before moving ahead with IPOs.

More specifically, it could clear a growing logjam of chip-related assets waiting to come to market. SoftBank Group Corp. also is trying to sell shares of semiconductor designer Arm Ltd. by early next year. Ampere Computing LLC, a startup making processors for data centers, is planning an IPO as well.

The Mobileye offering is being led by Goldman Sachs Group Inc. and Morgan Stanley. Mobileye plans for its shares to trade on Nasdaq under the symbol MBLY.

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September worst month for stocks since pandemic hit U.S.

Wall Street closed out a miserable September with a loss of 9.3%, the worst monthly decline since March 2020. The S&P 500 fell 1.5% Friday and is at its lowest level in almost two years. The benchmark index has lost ground for six of the last seven weeks and posted its third straight losing quarter. The Dow Jones Industrial Average lost 1.7% and the Nasdaq fell 1.5%. Nike fell sharply after the company had to slash prices to clear inventories, while Carnival dropped following weaker-than-expected quarterly results. Bond markets were showing more calm as yields relaxed.

Wall Street is at its worst levels in almost two years Friday as the end nears for what’s been a miserable month for markets around the world.

The S&P 500 was down 0.4% in afternoon trading after flipping between small losses and gains through the morning. It’s at its lowest level since November 2020, and it’s on pace to close out its sixth weekly loss in the last seven, one of its worst months since the early 2020 coronavirus crash and its third straight losing quarter.

The Dow Jones Industrial Average was down 213 points, or 0.7%, at 29,010, as of 1:56 p.m. Eastern time, and the Nasdaq composite was down 0.2%.

The main reason for this year’s struggles for financial markets has been fear about a possible recession, as interest rates soar in hopes of beating down the high inflation that’s swept the world.

The Federal Reserve has been at the forefront of the global campaign to slow economic growth and hurt job markets just enough to undercut inflation but not so much that it causes a recession. More data arrived Friday to suggest the Fed will keep its foot firmly on the brakes on the economy, raising the risk of its going too far and causing a downturn.

The Fed’s preferred measure of inflation showed it was worse last month than economists expected. That should keep the Fed on track to keep raising rates and hold them at high levels a while, as it’s loudly and repeatedly promised to do.

Vice Chair Lael Brainard was the latest Fed official on Friday to insist it won’t pull back on rates prematurely. That helped to keep snuffed out hopes on Wall Street for a “pivot” toward easier rates as the economy slows.

“At this point, it’s not a matter of if we’ll have a recession, but what type of recession it will be,” said Sean Sun, portfolio manager at Thornburg Investment Management.

Higher interest rates knock down one of the main levers that set prices for stocks. The other lever also looks to be under threat as the slowing economy, high interest rates and other factors weigh on corporate profits.

Cruise ship operator Carnival dropped 21% for one of Wall Street’s worst losses after it reported a bigger loss for its latest quarter than analysts expected and revenue that fell short of expectations.

Nike slumped 12.1% in what could be its worst day in two decades after it said its profitability weakened during the summer because of discounts needed to clear suddenly overstuffed warehouses. The amount of shoes and gear in Nike’s inventories swelled by 44% from a year earlier.

This year’s powerful surge for the U.S. dollar against other currencies also hurt Nike. Its worldwide revenue rose only 4%, instead of the 10% it would have if currency values had remained the same.

Nike isn’t the only company to see its inventories balloon. So have several big-name retailers, and such bad news for businesses could actually mean some relief for shoppers if it leads to more discounts. It echoed some glimmers of encouragement buried within Friday’s report on the Fed’s preferred gauge of inflation. That showed some slowing of inflation for goods, even as price gains kept accelerating for services.

Another report on Friday also offered a glimmer of hope. A measure of consumer sentiment showed U.S. expectations for future inflation came down in September. That’s crucial for the Fed because tightly held expectations for higher inflation can create a debilitating, self-reinforcing cycle that worsens it.

Treasury yields eased a bit on Friday, letting off some of the pressure that’s built on markets.

The yield on the 10-year Treasury fell to 3.75% from 3.79% late Thursday. The two-year yield, which more closely tracks expectations for Fed action, sank to 4.16% from 4.19%.

Still, a long list of other worries continues to hang over global markets, including increasing tensions between much of Europe and Russia following the invasion of Ukraine. A controversial plan to cut taxes by the U.K. government also sent bond markets spinning recently on fears it could make inflation even worse. Bond markets calmed a bit only after the Bank of England pledged mid-week to buy however many U.K. government bonds are needed to bring yields back down.

The stunning and swift rise of the U.S. dollar against other currencies, meanwhile, raises the risk of creating so much stress that something cracks somwhere in global markets.

Stocks around the world were mixed after a report showed that inflation in the 19 countries that use Europe’s euro currency spiked to a record and data from China said that factory activity weakened there.

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Jack Dorsey and Elon Musk texts criticize Twitter board

If Twitter cofounder Jack Dorsey was hoping to see a culture change in the company’s top brass, Elon Musk would certainly fit the bill.

But the Tesla CEO’s first foray into the social media space may prove short-lived. After striking a $44 billion deal last April to buy Twitter, Musk has been attempting to pull out of it since July, citing the unverifiable number of spam accounts on the platform.

With his court date set for next month in Delaware, details continue to emerge about those turbulent few months, including Musk agreeing to sit on the company’s board before abruptly changing his mind and opting instead to buy out all of Twitter’s remaining shares to take the company private.

Musk made it clear that if he had become the sole owner of Twitter—or, now, if a judge compels him to go through with the purchase anyway—he would bring about some big changes to the social media network and how the company is run. And new evidence reveals just how much Twitter cofounder and former CEO Jack Dorsey, who stepped down from the company’s board last May, wanted to see those changes happen.

“The board is terrible,” Dorsey wrote to Musk in a text message, one of many that were collected and disclosed this week as part of a pretrial discovery process. 

Dorsey’s text—dated April 5, the day Twitter announced Musk as a new board member—spared only company CEO Parag Agrawal, who Dorsey called “an incredible engineer.” 

But as the takeover deal dragged on and tensions emerged between Musk and Twitter’s board, Dorsey made his true feelings about Agrawal and the rest of Twitter’s board known in a series of messages that criticized the board’s cautious behavior, while painting Musk as the savior the company had been waiting for.

Dorsey and Twitter’s board

In texts sent to Musk last March, Dorsey revealed that he had tried to get him approved by the board as early as 2020, which the board refused. Dorsey criticized Twitter’s board for being too “risk-averse” and said they had refused to bring on a figure like Musk because they felt it would create “more risk” for the company.

It wouldn’t be the last time Dorsey criticized Twitter’s board in his text exchanges with Musk. 

On April 25, Dorsey defended Agrawal as being “great at getting things done when tasked with specific direction,” but the next day, seemingly after a board meeting, Musk texted to Dorsey that the two of them were in “complete agreement” over Agrawal, specifically that the Twitter CEO had been “moving far too slowly and trying to please people who will not be happy no matter what he does.”

Dorsey answered around two hours later: “It became clear that you can’t work together. That was clarifying.”

Unpredictable Musk

As CEO and founder of Tesla and SpaceX, Elon Musk made a name for himself as a hard, unforgiving, and at times even rash boss.

Last June, Musk mandated that all of Tesla’s white-collar staff return to the office full-time, warning that those who didn’t could “pretend to work somewhere else.” He expects long work hours, willingly working for upwards of 120 hours a week himself, and once allegedly worked a 24-hour day—on his birthday.

Musk’s unique leadership style has gotten him into hot water with his own companies at times. A single foray on Twitter can send Tesla stock prices plunging or cryptocurrencies soaring, and shareholders of his businesses have even asked judges to muzzle his Twitter feed.

Musk’s unpredictability as a person and as a boss left some Twitter employees concerned last spring that him taking over would mean a complete culture change, including a return to the office and a more demanding work environment overall.

But while Twitter employees worried, Jack Dorsey appears to have been eagerly awaiting Musk getting involved at Twitter for quite some time. Last April, shortly after the takeover deal had been announced, Dorsey heavily criticized Twitter’s board, saying “it’s consistently been the dysfunction of the company.”

A week later, Dorsey publicly vouched for Musk as the right person to take the company forward by first taking it private. “Elon is the singular solution I trust. I trust his mission to extend the light of consciousness,” Dorsey wrote.

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