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Dee Hock, Credit Card Visionary, Is Dead at 93

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Dee Hock, a banker with a junior college degree who shaped the Visa credit card into a global financial behemoth, died on July 16 at his home in Olympia, Wash. He was 93.

His son David confirmed the death.

The credit card business was in an early, rocky stage of development in 1966 when Mr. Hock was named to run the credit card department of National Bank of Commerce in Seattle, which was licensed by Bank of America to issue its BankAmericard.

At the time, the business was beset by bad debts and fraud, and the cards themselves were primitive: They lacked the magnetic stripes that would later encode customer information; transactions that required bank authorizations took a long time; and the embossed information on them — customer name, card number, expiration date — was awkwardly copied onto receipts with a heavy imprinter.

“By 1968, I was extremely concerned that the industry may go under and our bank’s investment with it,” Mr. Hock told Plazm, an arts and politics magazine based in Portland, Ore., in 2013. “I was attending a meeting of all of the licensees of BofA, which soon became a shambles of argument and accusations.”

He became the leader of a committee of bankers whose institutions licensed the BankAmericard, which was first issued in 1958. The panel’s mission: to determine the card’s future. (The American Express card made its debut that same year; eight years earlier, Diners Club had issued what is widely consider the first credit card.)

The committee’s solution was to create a new company, National BankAmericard, to be separate from Bank of America and to be controlled by the banks that issued the card. Mr. Hock was named president and chief executive. In 1976, after an in-house contest, the company was renamed Visa.

As chief executive, he oversaw the development of the first electronic authorization system and the first interbank electronic clearing and settlement system. Banks would issue the cards, not Visa, and they were mandated to add the magnetic stripe to their cards.

“Dee Hock realized something in the late 1960s that few others really understood: Computers and telecommunications would soon make it possible to build a global ‘electronic value exchange’ system that would soon enable customers to pay for goods and services ‘anywhere you want to be,’” David Stearns, the author of “Electronic Value Exchange: Origins of the VISA Electronic Payment System” (2011), wrote in an email. (The company renders its name in all capital letters.)

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In a tribute, Alfred Kelly Jr., the chief executive of Visa, wrote that Mr. Hock had had a vision of “a world of frictionless commerce where anyone, anywhere could exchange value 24 hours a day, seven days a week, with absolute reliability.”

That vision, long since realized, has made Visa the world’s leading credit card network, with 3.9 billion cards issued and a total purchase volume of $13 trillion.

“What he did was undeniable: He made credit cards work,” Joe Nocera, a former New York Times columnist who wrote about Mr. Hock in his book “A Piece of the Action: How the Middle Class Joined the Money Class” (1994), said in a phone interview. “He took a system on the brink of collapse and said, ‘Follow me, I’ll take you to the promised land.’”

Dee Ward Hock ws born on March 21, 1929, in North Ogden, Utah. His father, Alma, was a utility lineman. His mother, Cecil (Dawson) Hock, was a homemaker.

As a boy, Dee became enamored of the biology and ecology around him in rural Utah, but he followed a banker’s career track after graduating in 1949 from the two-year Weber State College (now University) in Ogden.

Over the next 17 years, Mr. Hock was the manager of two branches of the bank Pacific Finance; an assistant manager of public relations and advertising for Pacific; general manager of the Columbia Investment Company; and a supervisor at CIT Financial (now Group). He was hired by National Bank of Commerce in 1966. But before joining it, he had “essentially retired on the job,” his son said in an interview.

“When people left him alone, he was usually the most successful part of the organization,” David Hock added. “But when they wanted to fix it, they usually messed it up.”

Energized by his work at Visa, Mr. Hock moved the company into offering fdebit cards, which gave cardholders access to checking accounts, as well as a premium card and a money-market fund.

“Mr. Hock is a magnificent strategist, maybe even brilliant,” Helene Duffy, a consultant in the field of electronic funds transfer, told The Times in 1981. “He has always been determined to have Visa be the premier payment system, and has not deviated from that basic goal.”

In addition to his son David, Mr. Hock is survived by a daughter, Lynette Elze; seven grandchildren; and seven great-grandchildren. His wife, Ferol (Cragun) Hock, died in 2018. Another son, Steven, died in 2012.

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At Visa, Mr. Hock encouraged innovation and experimentation — among its employees and among the banks that licensed the credit card. Rather than running the company under a traditional hierarchical management system, he sought input from the bottom up.

It was an apt way of managing a business whose member banks compete against one another for customers but at the same time must cooperate to make Visa work effectively. But, he conceded to Fast Company magazine in 1996, Visa implemented only about 25 percent of what he called his “chaordic” concept of management — a balance of chaos and order.

That concept, as he explained it, applies to organizations and businesses where power is widely distributed. He wrote two books about it, “Birth of the Chaordic Age” (1999) and “One From Many: VISA and the Rise of Chaordic Organization” (1999).

Mr. Hock resigned from Visa in 1984 to become a rancher, but eight years later he began consulting organizations about his chaordic ideas.

In “One From Many,” he recalled speaking to groups and asking them what they thought was the most important responsibility of a manager.

All the answers, he wrote, were “downward looking — having to do with exercise of authority, with selecting employees, motivating them, training them, appraising them, organizing them, directing them and controlling them.”

He added: “That perception is completely mistaken. In chaordic organizations, it must be stood on its head, as it should in all organizations.”

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A journalist since 1994, he also founded DMGlobal Marketing & Public Relations. Glover has an extensive list of clients including corporations, non-profits, government agencies, politics, business owners, PR firms, and attorneys.

Business

A Tax Loophole’s Powerful Defender

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Sinema is in. But a plan to close a big tax loophole is out.

Last night, Senator Kyrsten Sinema, Democrat of Arizona, announced her support for the Inflation Reduction Act — the climate, tax and health care package that would spend about $300 billion, and raise taxes by roughly the same amount, over 10 years. With Sinema on board, the bill is likely to move quickly through the Senate.

Sinema had one main request before she would sign on: Remove a provision that would have partly closed the carried interest loophole. This bit of wiggle room in the tax code mainly benefits private equity professionals, allowing them to pay lower investment tax rates on compensation that should almost certainly be considered ordinary income. The loophole’s expected survival is being cheered by the private equity and real estate industries, but it is also causing a lot of head-scratching.

Sinema has been silent on why she considers preserving the carried interest loophole so important. She helped prevent a similar measure from being included in the Build Back Better bill last year. But there appears to be little public record of Sinema discussing why she supports special tax treatment for carried interest. According to a search of the Congressional Record, Sinema has apparently never uttered the phrase “carried interest” in a public legislative session.

But Sinema has voiced her support for private equity. On the House floor in 2016 when she was a representative, she said that private equity investors “provide billions of dollars each year to Main Street businesses,” and that this investment helped support “130,000 workers and their families” in Arizona alone.

There has been bipartisan interest in closing the loophole. Both President Biden and former President Donald Trump tried to do so. Many on Wall Street, including Jamie Dimon, chief executive of JPMorgan Chase, and Robert Rubin, a former Treasury secretary, have called for its end. And there is little evidence to back up the industry’s claim that a tax break for managers of private equity funds creates more companies and jobs.

Some speculate that campaign contributions swayed Sinema. In the past five years, Sinema has received $2.2 million from investment firms, according to Open Secrets. KKR and Goldman Sachs are among her top contributors. Still, that’s far less than what Senator Chuck Schumer of New York, the majority leader, receives in Wall Street contributions, and he supported the bill’s original carried interest fix. Even Mark Kelly, a Democrat and Arizona’s other senator, has raised more from Wall Street in the current election cycle than Sinema. But Sinema isn’t running for office again until 2024, while Kelly faces a race this year.

China halts some cooperation with the U.S. after Speaker Nancy Pelosi’s Taiwan visit. It is canceling planned meetings with the Defense Department as well as talks on maritime safety and climate. Japan condemned China for its military exercises near Taiwan, and Pelosi, visiting Japan, responded defiantly to the rising tensions.

Republican state treasurers are “weaponizing” public office against climate change. An investigation by The Times’s David Gelles uncovered a campaign to thwart regulations aimed at shifting to sustainable energy, advanced by the State Financial Officers Foundation, a little-known nonprofit group. It has been pushing officials to promote oil and gas interests, in part by cutting off financial institutions that “discriminate” against the fossil fuel industry.

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A consumer watchdog scrutinizes Goldman Sachs’s account management practices. The bank said its credit card unit was being investigated by the C.F.P.B. for its handling of refunds and billing disputes, among other things. Goldman started offering a card with Apple in 2019 in an effort to diversify into retail banking.

Warner Bros. Discovery is pivoting to the traditional. It reported a loss of $3.4 billion in its first full quarter as a merged company. Its C.E.O., David Zaslav, said it would adopt a “more sensible” approach to budgets after a Netflix-induced era of excess. The company will combine its two main streaming services, HBO Max and Discovery+, and may create an ad-supported offering.

Yesterday, both Elon Musk’s counterclaims against Twitter and its response to him were made public. The two sides largely dug in their heels on their respective arguments, with some fine-tuning. But the filings also include retellings of the deal narrative from both points of view, and — despite Musk and Twitter having agreed to a recap of how it all came together as part of their joint proxy agreement — their memories now notably diverge.

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Here’s a play-by-play of the weeks leading up the deal, as both sides see it:

Musk buys up shares in Twitter starting in January. Musk says it all began because of his faith in the company, according to the filing: “Despite his growing concerns with the company’s direction, he still believed in Twitter as a product — one that provided a necessary public good while still offering significant untapped opportunity for monetization.” (The S.E.C. is looking into whether Musk’s early investments in Twitter were truly passive.)

Musk says he’s joining the Twitter board on April 5. Musk says Jack Dorsey and the Twitter board asked him to join: “Musk was hesitant at first, but listened to their pitches over the next couple weeks.” Twitter said in its proxy that joining the board was one of three paths Musk had told Twitter he planned to pursue with his stake — presumably the one that was the least threatening.

Musk rejects the board seat on April 9. Musk says he “eventually realized that Twitter’s current management was not up to the task of fixing Twitter” and he “would need more than a single board seat.” Twitter says he was rash: Musk abruptly changed his mind about joining Twitter’s board (after first negotiating an offer to join the board, accepting it in writing, and Tweeting that he was “looking forward” to taking the position).”

Musk offers $54.20 a share to buy Twitter on April 14. Musk said this was what his bankers at Morgan Stanley told him the company was worth, using a model based “in significant part” on Twitter’s daily active user count (“mDAU”). Twitter says in its response that Musk “invented” his reliance on those disclosures, noting that it earns the bulk of its revenue from advertisers who focus on the return on investment from their campaigns.

The two sign a deal at warp speed within two weeks. Musk said Twitter moved fast because it knew it would soon be restating its user count, which “would have likely caused the Musk Parties to ask further questions that could delay the signing of the Merger Agreement.” Twitter says in its proxy that it was Musk who pushed Twitter to sell quickly: On April 24, Musk told Twitter’s chair, Bret Taylor, that he was sending over a draft merger agreement so they could have a deal by the next day’s stock market open. In its response to Musk’s claims, Twitter writes: “Musk sought an urgent deal, undertook no due diligence, and offered a self-described ‘seller friendly’ merger agreement that contained no representations about false or spam accounts or mDAU.”


— Claude Silver, the “chief heart officer” at the agency VaynerMedia. The pandemic and remote work have led to an increase in unusual job titles.


Visa and Mastercard are suspending credit card payments for advertising on Pornhub, a site that has put the companies at the center of a yearslong controversy over potential complicity in illegal activity.

As DealBook reported earlier, a California federal court last Friday declined to dismiss Visa from a case brought by a woman who struggled to have sexually abusive videos, taken of her as an underage teen, removed from Pornhub. The suit argues that Visa helped monetize the illegal content via advertising, even though it has blocked the use of Visa cards for payments on Pornhub since 2020.

The legal decision has “created new uncertainty” about the role of TrafficJunky, the advertising arm of Pornhub’s parent company, MindGeek, Al Kelly, Visa’s C.E.O. and chairman, wrote in a company blog post yesterday. “Accordingly, we will suspend TrafficJunky’s Visa acceptance privileges based on the court’s decision until further notice,” he wrote. Kelly also said that his company condemned “sex trafficking, sexual exploitation and child sexual abuse.”

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Mastercard put up its guard. Not a party to the suit but perhaps anticipating future litigation, it told DealBook in a statement that it was also blocking payments to TrafficJunky. “New facts from last week’s court ruling made us aware of advertising revenue outside of our view that appears to provide Pornhub with indirect funding,” a spokesman said. Like Visa, Mastercard halted direct payments on Pornhub after Nicholas Kristof highlighted credit card companies’ ties to the site in a Times Opinion piece.

The pressure has been on ever since, not least from Bill Ackman, the founder of the hedge fund Pershing Square Capital Management, who is campaigning for accountability. “I just learned that @discovercard is still providing payment services to MindGeek despite @Visa and @Mastercard’s suspension,” Ackman tweeted yesterday. “This needs to stop now!” Discover did not comment in time for publication.

Deals

  • Coinbase and BlackRock are joining forces, connecting platforms so BlackRock clients can easily access the crypto exchange. (FT)

  • Halliday, a buy-now-pay-later start-up for financing blockchain game purchases, gets $6 million in a seed round led by Andreessen Horowitz. (TechCrunch)

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David F. Gallagher contributed to today’s DealBook.

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.



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The jobs report suggests President Biden is right about a recession.

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The strong jobs report was welcome news for President Biden, who has insisted in recent weeks that the United States is not in recession, even though it has suffered two consecutive quarters of economic contraction.

But the report also defied even the president’s own optimistic expectations about the state of the labor market — and appeared to contradict the administration’s theory of where the economy is headed.

Mr. Biden celebrated the report on Friday morning. “Today, the unemployment rate matches the lowest it’s been in more than 50 years: 3.5 percent,” he said in a statement. “More people are working than at any point in American history.”

He added: “There’s more work to do, but today’s jobs report shows we are making significant progress for working families.”

The president has said for months that he expects job creation to slow soon, along with wage and price growth, as the economy transitions to a more stable state of slower growth and lower inflation.

“If average monthly job creation shifts in the next year from current levels of 500,000 to something closer to 150,000,” Mr. Biden wrote in an opinion piece for The Wall Street Journal in May, “it will be a sign that we are successfully moving into the next phase of recovery — as this kind of job growth is consistent with a low unemployment rate and a healthy economy.”

White House officials prepped reporters this week for the possibility that job growth was cooling, in line with Mr. Biden’s expectations. The expectations-busting job creation number appeared to surprise them, again.

But Mr. Biden will almost certainly cite the numbers as evidence that the economy is nowhere near recession. He and his aides have repeatedly said in recent weeks that the current pace of job creation is out of step with the jobs numbers in previous recessions, and proof that a contraction in gross domestic product does not mean the country is mired in a downturn.

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Amazon to Buy Maker of the Roomba for $1.7 Billion

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Hey, Alexa, tell Roomba to vacuum the bedroom.

Amazon announced on Friday that it had reached an agreement to buy iRobot Corp., the maker of the Roomba robotic vacuum, for $1.7 billion, adding to its growing roster of smart home products.

“We know that saving time matters, and chores take precious time that can be better spent doing something that customers love,” Dave Limp, senior vice president of Amazon Devices, said in a statement announcing the acquisition.

Amazon will acquire iRobot, including its debt, for $61 per share in an all-cash transaction, according to the statement. The purchase would be Amazon’s fourth-largest acquisition after the company bought Whole Foods for $13.7 billion in 2017 and the movie studio MGM for $8.5 billion last year. Last month, Amazon announced a foray into medical services with an agreement to spend $3.9 billion to acquire One Medical, a chain of primary care clinics around the United States.

The Roomba and iRobot’s other cleaning devices, including robotic mops and air purifiers, join a portfolio of Amazon-owned smart home devices that includes Ring doorbells and Alexa, Amazon’s virtual assistant and speaker. iRobot also makes an educational robot called Root that allows children to experiment with coding.

The Roomba first hit dirty floors in 2002, to the delight of lazy people and the bemusement of pets, particularly cats. The New York Times described it as “easy, effective and fun,” and a product that quickly became “a member of the household.”

The $200 early version struggled around corners and chair legs, even falling down stairs. But 20 years later, the Roomba j7 can, according to the company, recognize over 80 common objects (including cords and pet waste), returns to its dock once its chores are complete and then empties itself. The most expensive option sells for $999.99.

While iRobot is best known for its roving cleaning equipment, the technology powering these tools is also sucking up troves of spatial data used to map users’ homes. Some digital rights groups have expressed concern that this data could help companies like Amazon find out information about the size of homes and even their contents, right down to the brand.

iRobot reported $255.4 million in revenue in the second quarter of 2022, a 30 percent decrease over the previous year. Amazon reported $121.2 billion in revenue in the second quarter, up 7.2 percent from a year earlier but down slightly from the 7.3 percent revenue growth it reported in the first quarter of this year. It was Amazon’s slowest growth in more than two decades after the company began to come down from its high pandemic demands.

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