Also: Asian stocks, Instagram NFTs, and Tesla in China.
Good morning. David Meyer here in Berlin, filling in for Alan.
Crisis is an accelerant—as we saw with the move toward hybrid work over the pandemic, and as we’re now seeing in the energy sector, in the context of Russia’s invasion of Ukraine.
European desperation to abandon Russian fossil fuels will benefit the American liquified natural gas (LNG) sector in the short term, as Shawn Tully writes here. But it’s also set to drive faster adoption of green hydrogen power, as Marco Alverà, CEO of Italian energy giant Snam, told Bernhard Warner:
“EU leaders are saying Europe will need 20 million tons of hydrogen, of which 10 million will be imported, and 10 million will be produced within the EU. So, to simplify, hydrogen alone could make up almost half of what Russia supplies Europe today in natural gas… I am probably one of the strongest advocates for hydrogen, and I wouldn’t have dreamt of such an ambitious policy.”
This would be a very visible push—Alverà said there would need to be “a kind of concerted, almost wartime effort” to increase availability of solar panels and electrolyzer factories, and suggested this might mean “compressing” permitting and procurement processes.
But some changes wrought by the moment may prove to be a bit less obvious, albeit meaningful in their own way.
At the end of last week, the Kremlin banned the export of over 200 goods, partly in retaliation against sanctions, and perhaps for stockpiling purposes too. Being a guitar nerd, I was curious to find out if there might be an impact on the output of Electro-Harmonix, a legendary American effects pedal company (Pink Floyd, U2 and countless others can thank EHX for their signature sounds) that moved into Russia as the Soviet Union collapsed.
You can read the full history of EHX’s Russian adventures here—and it is a wild story involving rock and roll and racketeers—but the relevant point right now is EHX’s ownership of a factory in Saratov called New Sensor, which is one of the world’s only two remaining large-scale producers of vacuum tubes. These glass tubes (or valves as some call them) were used in early electronics, but are these days used almost exclusively to boost and add color to audio signals. They’re in some high-end microphones and hi-fi systems, and they are responsible for traditional guitar amplifiers’ warm, crunchy tones.
Turns out these tubes are on Putin’s export-ban list. “The whole situation has escalated,” EHX CEO Mike Matthews told me Friday, explaining that his lawyers were trying to find a way to get the valves out. But on the weekend he issued a statement saying no more inventory would come.
That leaves one lone factory in the whole world—the JJ plant in Slovakia—still making and exporting vacuum tubes in significant numbers. And unless Russia lifts its export ban or someone else starts making this mostly obsolete technology at scale again, that will mean a constricted supply, most likely making valve-based guitar amps more expensive and inaccessible to young artists.
It was already the case that many guitarists have been switching to digital processing for their sounds, because it’s cheap and convenient. I expect that trend to now accelerate. But while digital replication of analog tones has improved a lot in recent years, it’s still doesn’t sound—or feel, to the player—quite the same as the raw tones produced by glowing tubes. It’s shinier and less organic, and perhaps that’s what we can expect from the future sound of guitar music, because a dictator decided to wage war on his neighbor.
More news below.
David Meyer
@superglaze
david.meyer@fortune.com
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Asian surge
Hong Kong's Hang Seng index surged more than 9% today and the Shanghai Composite was up 3.5%, in a significant rebound driven by positive reports about a potential cooperation plan between the U.S. and China regarding U.S.-listed Chinese stocks. Tencent's shares rose by 23%, and Alibaba's by 25%. CNBC
Instagram NFTs
Mark Zuckerberg says Meta is "working on bringing NFTs to Instagram in the near term" but there's "a bunch of technical things to be worked out" and details are scarce. Also, Meta metaverse avatars might wear NFT'd virtual clothing. Excited yet? If so, you're swimming against the tide, because Google Trends shows people are losing interest in NFTs and the metaverse. Fortune
Tesla in China
China's tightened COVID restrictions have forced Tesla to shutter its Shanghai "Gigafactory 3" for a couple days. Reuters
Daylight saving time
The U.S. Senate has unanimously voted to make daylight saving time permanent from next year, leaving the House to further greenlight the move. If it does, some argue Americans' health could be negatively affected. Fortune
The power of organizational purpose Organizations that lead with purpose are not only driving societal prosperity, but sustainable prosperity for the business, too. In the latest That Makes Cents podcast, Kwasi Mitchell, Deloitte’s Chief Purpose Officer, and Dan Kihanya, Director of REI’s Path Ahead Ventures, discuss how REI found its path to purpose, lining up its business with values that resonate with customers, employees, and society. Listen here
Sabbatical trend
A growing number of companies are trying to avoid long-term employees slipping into the "Great Resignation" by offering them sabbaticals, writes Anne Kadet: "Some employers offering sabbaticals say the perk’s benefits extend far beyond giving loyal employees a needed break—they strengthen the entire company." Fortune
Ethereum changes
Ethereum, the second-best-known cryptocurrency, is about to see big changes in its underlying blockchain. The system is switching from the planet-murdering proof-of-work mechanism (for validating the information in the chain) to an alternative model called proof-of-stake, and is testing things before making the final transition. Fortune
Meta fine
South Africa's antitrust regulator is pushing for a 10%-of-local-revenue fine on Meta/Facebook, over the company's 2020 decision to remove an e-government service called GovChat from its WhatsApp messenger, allegedly for violating contractual terms. Daily Maverick
Lobbying for Russia
The Financial Times has an interesting piece on the American lawyers and lobbyists who have made big bucks representing Kremlin-linked clients in the eight years since Russia's invasion of Ukraine began. They're backing away now, of course. Financial Times
This edition of CEO Daily was edited by David Meyer.
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