Forbes Daily: Retail Brands Build On Covid Boost

Good morning,

Even those without a tendency toward retail therapy might have found themselves shopping online more during the Covid-19 pandemic—and not just for groceries—people started buying more electronics and clothing online, too.

We’ve got the stories of two clothing brands that took off during Covid, Aritzia and Aviator Nation, and how they’re leveraging that success for a stronger brick and mortar presence going forward.

BREAKING NEWS

At least 275 passengers aboard two trains in India were killed and hundreds more were injured in a three-train crash Friday, and Prime Minister Narendra Modi said those responsible for the disaster “will be punished stringently.” Preliminary investigations show an electronic signal error sent a passenger train onto a track where it collided with a freight train in one of the country’s deadliest rail disasters in decades.

The latest chaotic chapter of debt ceiling negotiations officially came to a close after President Joe Biden signed legislation Saturday to lift the federal borrowing limit until 2025. In an Oval Office address, the president commended both Democratic and Republican congressional leaders for “acting responsibly” and operating in “good faith.”

BUSINESS + FINANCE

Back in 2007, Paige Mycoskie was working at a Venice Beach surf shop when she started Aviator Nation, a brand featuring designer hoodies and sweatpants that took off with Gen Z during Covid. She owns 100% of the company, and with an estimated worth of $380 million, she’s one of America’s richest self-made women.

Brian Hill opened the first Aritzia in a Vancouver mall when he was 23 years old. Then Covid helped turn it into one of America’s fastest growing fashion brands—Hill calls it a “40-year overnight success”—he’s now worth an estimated $950 million.

WEALTH + ENTREPRENEURSHIP

Adeyemi “Ade” Ajao is not only the first-ever Black investor on Forbes’ Midas List of the world’s top venture capitalists, his firm Base10 Partners is also the first Black-led VC firm to reach $1 billion in assets under management. The Silicon Valley transplant of Nigerian-Spanish descent focuses investments on meaningful businesses for the vast majority of the planet, not just to improve the lives of the richest 1%.

TECH + INNOVATION

Fractional ownership has long promised to democratize access to art, and a new company Freeport is bringing blockchain into the mix—ownership of Andy Warhol’s pink Marilyn Monroe print can be chopped into 10,000 shares represented by tiny bits of computer code. But the ability to make small investments in artwork can come at a cost: high management fees.

TRENDS + EXPLAINERS

Meta announced its latest VR headset last week, and Apple is expected to launch their long-awaited headset today at their annual developers conference —here’s a rundown on the differences between VR and AR, as well as popular uses for each.

DAILY COVER STORY

The AI Founder Taking Credit For Stable Diffusion’s Success Has A History Of Exaggeration

TOPLINE The way he would tell it, Emad Mostaque is the modern-day Renaissance man who kicked off the AI gold rush. He’s an award-winning hedge fund manager with a master’s degree from Oxford, a trusted confidant to the U.N. and the tech founder behind Stable Diffusion — the text-to-image generator that broke the internet last summer and, in his words, pressured OpenAI to launch ChatGPT.

In reality, Mostaque has a bachelor’s degree, not a master’s degree from Oxford. The hedge fund’s banner year was followed by one so poor that it shut down months later. The U.N. hasn’t worked with him for years. And while Stable Diffusion was the main reason for his own startup Stability AI’s ascent to prominence, its source code was written by a different group of researchers.

These aren’t the only misleading stories Mostaque has told to maneuver himself to the forefront of what some are calling the greatest technological sea change since the internet — despite having no formal experience in the field of artificial intelligence.

After Stable Diffusion went viral last summer, blue-chip venture capital firms Coatue Management and Lightspeed Venture Partners poured in $100 million, giving Mostaque’s London-based startup a $1 billion valuation. But to build buzz around Stability, Mostaque made an elaborate gambit supported by exaggerated claims and promises, overstating his role in several major AI projects.

WHY IT MATTERS AI experts and prospective investors have been privately expressing doubts about some of Mostaque’s claims for months now. Despite Silicon Valley’s sudden, insatiable appetite for AI startups, a number of venture capitalists told Forbes that the Stability founder has been struggling to raise hundreds of millions more in cash at a roughly $4 billion valuation. “So many things don’t add up,” said one VC who rejected Mostaque’s funding overtures.

MORE Inside ChatGPT’s Breakout Moment And The Race To Put AI To Work

FACTS AND COMMENTS

Waves of layoffs continue at some of the nation’s largest employers, but the latest jobs report also showed staggering growth in total employment:

339,000: Number of jobs added in May, far exceeding economist projections of 190,000

3.7%: Last month’s unemployment rate, up from 3.4% in April

“Another month of above-expectation job gains increases the likelihood that more rate hikes are ahead”: According to First American economist Odeta Kushi

STRATEGY AND SUCCESS

More than 500 anti-trans bills have been introduced in states across the U.S., and while not all will become law, those that are enacted will force companies to change how they do business—including bathroom bans that call on businesses to impose strict requirements and drag bans that restrict the types of entertainment a business can provide. Here’s a look at which states have passed different bans and what it means for business leaders.

VIDEO

QUIZ

Which key U.S. Army base in North Carolina—one of the largest military installations in the world—was renamed to Fort Liberty as the Defense Department rebrands confederate monuments?

A. Fort Bragg

B. Fort Hood

C. Fort Rucker

D. Fort Benning

Check if you got it right here.

ACROSS THE NEWSROOM

• Announcing the 2023 Forbes 30 Under 30 Local Lists. We’re looking for the top young founders and leaders in the innovation hubs of Atlanta, Austin, Boston, Chicago, Cleveland, Los Angeles, Miami, Puerto Rico, Seattle and Toronto. The deadline to submit nominations is June 9.

BEYOND THE NEWSROOM

• The 2023 Forbes Iconoclast Summit will convene the world’s most iconic visionaries, financial titans, pioneering technologists and key executives—including Mellody Hobson and Ray Dalio—for conversations on the most critical issues impacting our economy and markets today. Join us in New York City on June 12.

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