When Thomas first started programming, it was 1969. He was a kid just out of high school in Toronto, without any particular life goal. His father was a carpenter, but good luck following in his family’s footsteps; Thomas was all thumbs. “My father knew I couldn’t hammer two pieces of wood together,” he laughs.
So his mother suggested something weird and newfangled: What about… computer programming?
Computers, in 1969, were still strange new curiosities, the size of big cabinets. But companies around the world were realizing they were invaluable for any task that required a lot of rapid-fire accounting, like tallying up payroll. Jobs were on offer to anyone who could learn even a little coding. So Thomas found “some fly-by-night, little pop-up school” in downtown Toronto, and over the next two months, learned the hot computer language of the day: COBOL (Common Business-Oriented Language).
After he graduated, he got hired in the check-sorting department of a major Canadian bank. (He doesn’t want me to name it, banks are secretive; “Thomas,” I should mention, is a pseudonym, if you hadn’t guessed that already.) Thomas wasn’t yet a programmer for the bank then, but over the next few years he made it clear he wanted to be, and his employer paid for him to do a bunch of honest-to-goodness college courses in coding, and in 1978 he began a long career at the bank as a programmer.
Thomas loved it. It was like constant puzzle-solving, a game of mental chess. He’d sit at his desk, writing out his code by hand, then give it to a “punchcard operator” who’d put holes in cards to represent his programming instructions. Twice a day they’d feed those cards into the huge “mainframe” computers at the bank. It would take hours for Thomas to find out if his code had actually worked correctly, or whether he’d made a goof that grounded things to a halt. If he had did, he’d pore over the error statements, rewrite the COBOL, and try again.
Over the next few years, Thomas became good at COBOL, and wrote thousands of invaluable lines of code. When the bank issued payments, it was his code, every day, helping them tally it all up correctly. As the ‘70s and ’80s and ’90s wore on, he and his coder colleagues probably wrote tens of millions of lines of COBOL. There’s one system he’s particularly proud of, a lightning-fast program that can process “anywhere between three and five million transactions a day. That’s my baby!” He wrote his first bits of that program in 1988.
And the thing is — that code is still running today.
Thomas retired from the bank in 2007 at about 60, and when he left, the bank was still relying on the system, which by then was 20 years old and written when Thomas had a lot more hair and when Phil Collins’s “Groovy Kind of Love” was a chart-topping hit. These days, the code is over three decades old. It’s still crunching millions of records a day. Indeed, he believes most of the code he and his peers wrote back in the day is still running because the bank can’t function without it.
In fact, these days, when the phone rings in the house Thomas retired to — in a small town outside of Toronto — it will occasionally be someone from the bank. Hey, they’ll say, can you, uh, help… update your code? Maybe add some new features to it? Because, as it turns out, the bank no longer employs anyone who understands COBOL as well as Thomas does, who can dive in and tweak it to perform a new task. Nearly all the COBOL veterans, the punch-card jockeys who built the bank’s crucial systems way back when, who know COBOL inside and out — they’ve retired. They’ve left the building, just like Thomas. And few young coders have any interest in learning a dusty, 50-year-old computer language. They’re much more excited by buzzier new fields, like Toronto’s booming artificial-intelligence scene. They’re learning fresh new coding languages.
So this large bank is still dependent on people like, Thomas, who is 73, to not only keep things running, but add new features and improvements.
Will his COBOL outlive him?
COBOL democratized coding; companies could take everyday people and train them to be useful COBOL programmers in a few months.
That bank is not alone. COBOL programs — some written so long ago that color TV wasn’t even a thing yet — are everywhere in our daily lives.
Consider: Over 80% of in-person transactions at U.S. financial institutions use COBOL. Fully 95% of the time you swipe your bank card, there’s COBOL running somewhere in the background. The Bank of New York Mellon in 2012 found it had 112,500 individual COBOL programs, constituting almost 350 million lines; that is probably typical for most big financial institutions. When your boss hands you your paycheck, odds are it was calculated using COBOL. If you invest, your stock trades run on it too. So does health care: Insurance companies in the U.S. use “adjudication engines’”— software that figures out what a doctor or drug company will get paid for a service — which were written in COBOL. Wonder why, when you’re shopping at a retailer you will see a clerk typing into an old-style terminal, with green text on a black background? It’s because the inventory system is using COBOL. Or why you see airline booking agents use that same black screen with green type to change your flight? “Oh, that’s COBOL — that’s definitely COBOL,” laughs Craig Bailey, a senior engineer at Faircom, a firm that makes software to help firms manage those old systems.
No one quite knows how much COBOL is out there, but estimates suggest there are as many as 240 billion lines of the code quietly powering many of the most crucial parts of our everyday lives. “The second most valuable asset in the United States — after oil — is the 240 billion lines of COBOL,” says Philip Teplitzky, who’s slung COBOL for decades for banks across the U.S.
But in older, massive industries central to the economy? COBOL’s still omnipresent. It makes it hard to innovate. How can you tinker, bolt on new features, using an ancient language that energetic young coders have no interest in? If big old banks aren’t the firms pushing forward with services like Venmo or Square or other fizzy “fintech” products, it would follow that COBOL is part of the problem. But if that’s the case why, exactly, is Thomas still being dragged out of retirement to keep it alive? Why can’t we do without it?
It’s partly because COBOL got there first — and was a tool fit perfectly for its task. COBOL was, in many ways, the spark that lit our modern computer age.
Programmers began devising COBOL in 1959. When it was finally released ten years later in 1969, it was the first language to make computers widely useful for everyday life. In the late ‘50s, computers had just left the “experimental” stage. Everyday companies had begun pondering whether having their own computer to crunch numbers could be valuable. The problem was, before COBOL came along, coding was cryptic and difficult to learn. Programmers often wrote software using some variant of what are called “assembly” languages, where the commands could be awfully abstruse. (For example, the command “LXA A,K” means “take the number loaded into location A of the computer’s memory and load it into the ‘index register’ K.”) Worse, computer makers often devised their own special languages for their computers. If you wrote some great code for a machine, it couldn’t run on a computer made by another company.
A new generation of ambitious programmers thought this was crazy. One was Grace Hopper, a rear admiral in the U.S. Navy — who’d cut her teeth on an early experimental computer — and a firecracker of a personality. (She’s the one who popularized the phrase: “It’s easier to ask forgiveness than ask permission.”) Hopper thought programming languages ought to more closely resemble English, so that they’d be easier to learn and to read. In 1955, she devised a language called “FLOW-MATIC” that aimed to do just that; to move a number from location A to location D, for instance, you’d simply write “TRANSFER A TO D”.
In 1959, a computer programmer named Mary Hawes decided her industry needed to devise a language that would be as easy to write as FLOW-MATIC, and one that could run on any machine. She assembled a committee of experts — including many from the nascent business-computer industry — to start creating the language, working together under the Defense Department. The goal was to make a language that the average corporate manager at a company could read and understand, even if they weren’t trained as a programmer.
That decade of work — heavily propelled by many female superstar contributors, such as the computer-science pioneer Jean Sammet — produced a language, much like FLOW-MATIC, that was easy on the eyes. To add two numbers, for example, you could write “ADD Num1, Num2 GIVING Result”. To run a calculation three times, you’d write “PERFORM 3 TIMES.”
“It’s really hard to overstate the importance of COBOL,” says Mar Hicks, associate professor of history at the Illinois Institute of Technology and author of Programmed Inequality. “It was doing something absolutely critical in computing. It was filling this niche that had gone unfilled in the early years of computing. And it changed the way that you could think about writing programs.”
It changed who could write it, too. COBOL democratized coding; companies could take everyday people and train them to be useful COBOL programmers in a few months, and to become experts in a year or two. This was crucial given that companies desperately needed more warm bodies to write software.
“You could pick people up out of the street,” says Jon Pyke, a British coder who learned COBOL back in the 1960s, “and basically and teach them how to do it.”
That older code can not only be good, but in crucial ways superior to newer code, is at odds with a lot of Silicon Valley myth making.
The other thing about COBOL is that it was fast. It had been designed specifically to do mammoth amounts of “transactions” really quickly. If you’re a retail chain, you need to count up your sales and recalculate your inventory every night. And you don’t have much time to do it — perhaps a couple of hours in the evening, after your business day ends, while your computer staff works late.
Banks, too: During the day, they’re frantically accepting transactions, requests from customers to take money in and out of their accounts. At night they have a few hours to balance all those books. If you’ve wondered why a check you’ve deposited won’t clear for a while, it’s partly because both banks need to run their mammoth COBOL jobs after the day staff has left. At Citibank, Teplitzky’s code ran through a huge center with 248 mainframe computers.
“You have a six-, eight- hour window where you have to do, if you’ll pardon the expression, a shitload of work — you have to do all transactions in a certain order,” he tells me. “It takes big, big iron to run a billion transactions through a six-hour batch window. It’s a screamer.”
COBOL? It was customized for working on those mainframe computers, which themselves were designed specifically to crunch bazillions of transactions, reading and writing data streams at a brisk pace. It was like a high-octane fuel designed specifically for a sports car. Over the years, COBOL “compilers” — the software that takes the English-like syntax of computer code and transforms it into the ones and zeros that a computer chip can execute — were refined more and more, so that COBOL’s “compiled code” became exceptionally speedy. Which means that part of the reason COBOL underlies so many crucial things we do is because it’s actually pretty good at it.
“They’ve had 50 years to get this right,” notes Bill Hinshaw, who runs COBOL Cowboys, an agency that provides COBOL programmers.
The sheer age of those COBOL systems is, oddly, actually something that works in their favor. Because they’re old, they have been relentlessly debugged. When a program is first written, it inevitably has problems. Sometimes it’s a typo, a misplaced command; other times, the user does something the programmer never expected, and things crash. When you get a new app, if it’s buggy and crash-prone, this is why: the creators sent it out into the world with lots of these little flaws. It can take days, weeks, or years to discover all the problems.
But those COBOL programs that run the world? They’ve had decades for coders and users to uncover all the problems, and to fix them.
Adriana Stern (not a pseudonym this time!), another coder I spoke to who worked for large Canadian banks, started her career in the ‘80s, when the systems were still ironing out some odd bugs. One day she found that a particular bank terminal in Quebec was sending the system accented letters — and the original programmer had never expected that to happen.
“So when the system tried to interpret it, it would choke,” she tells me. In another case, a different COBOL program kept crashing, and she finally realized it was because a new customer’s name had a single quotation mark in it — which the program accidentally thought was an instruction saying “the end of the data set,” grinding the code to a halt.
Stern worked for banks for 30 years, and she figures 85% of her work wasn’t writing bold new features for the bank — it was “maintenance.” Think of it like a sort of digital plumbing, fixing leaks, making everything run gradually more and more smoothly.
“It was hard work — you’re burning the candle at both ends,” she told me.
This is precisely why those COBOL systems are now so reliable. They’ve been debugged more than just about any code on the planet. A fizzy new TikTok-style app can launch and enjoy massive popularity even with a lot of bugs. If the “like” count on your latest post is slightly wrong, eh, no big deal. In contrast, if a major retailer miscounts its inventory, or a bank suddenly can’t send money? That causes financial chaos at scale.
“The entire GDP of the world is in motion in the [banking] network at any moment in time,” as Teplitzky notes. “A bank turns over twice its assets every day, out and in. A clearing bank in, say, New York, it could be more… So a huge amount of money is in motion in the network and in big backend systems that do it. They can’t fail! If they fail, the world ends. The world ends.”
COBOL is not merely fast; it’s also “stable, stable, stable”, as Thomas tell me. One of the processes he developed takes, every month, a file of about 2.4 million government pension and puts the proper amounts in people’s bank accounts. “We verify them and check them in 11 minutes. It hasn’t failed in 20 years.”
This idea — that older code can not only be good, but in crucial ways superior to newer code — is at odds with a lot of Silicon Valley myth making. Venture capital-backed startups usually tout the shiny and novel. Founders do not prance around boasting about how old their codebase is. Quite the opposite: They brag about their code being cutting-edge, pounded out in all-night sessions by bleary-eyed genius 21-year-olds. But as nearly every programmer will tell you, the newer and more recently written the software, the more likely it is to be a hot mess of bugs.
A good example of this could be witnessed during the pandemic. In the early days of Covid-19, businesses shut down en masse. Laid-off employees swarmed online to apply for unemployment benefits, and the websites for many state governments crashed under the load. In New Jersey, the governor told the press that their COBOL systems desperately needed help to deal with the new demands. “Literally, we have systems that are 40-plus-years-old,” he noted.
But technologists who were working behind the scenes to fix the problems knew that the number-crunching COBOL wasn’t the problem. That old stuff was working fine. No, it was the newer stuff that had crashed — the programs powering the website itself.
“The thing that went bananas was this web application in between the mainframe and the outside world. That was the thing that sort of fell apart,” says Marianne Bellotti, a programmer and writer who worked for years on government systems, and who observed New Jersey’s system. But it’s too embarrassing, as the historian Hicks points out, to admit that “oh, our web systems broke down.”
Bellotti’s seen the same thing happen with other government agencies, like the IRS. She was called in once to help with an IRS web app that wasn’t working. When they investigated, they found that, indeed, the problem was in newer programs, “this chunk of poorly written Java code”. The mainframe running COBOL, in contrast, was racing along like a Ferrari.
“The mainframes,” she says, “were responding within milliseconds.”
Being “stable” and old, though, can create a paradox — a curse of success. Because when code runs nicely without anyone needing to check up on it, eventually people drift away. They stop looking at it, stop inspecting it. And that means they stop understanding how, precisely, it works.
Certainly, they know that it works. Hey, it’s functioning every day, processing millions of transactions in a snap! But nobody quite knows why or how. COBOL has become an inscrutable mystery, a daemon that performs its tasks dutifully, but in a manner no one quite comprehends.
This can become a big problem when, years later, you really would like to change something, or add a new feature.
Dave Guarino saw this up close. He’s a software developer who worked for years for Code For America, a nonprofit that takes talented coders and and gets them help governments update their ancient services. A few years ago he was helping write a new web app so that Californians could more easily apply for food stamps. The web app floated on top of California’s older software systems, as it were; users would interact with the app, and it would pass along their requests to the decades-old code running on California’s mainframes.
And that’s where a problem occurred. At one point, his team wanted to build a way for food stamp recipients to book a meeting with a government official. The old California systems already had a section that would accept a request like that. But in the field where you’d input “when are you free to meet?” the older system only let you type 40 characters — and it wouldn’t let you use hyphens, so you couldn’t use a short form of language, like “M-W,” to show you were free Monday through Wednesday.
What a pain, Guarino thought. So he met with the person who managed that old software system. “Unfortunately, yes, those are real constraints,” the guy told him. And it was a COBOL problem; it had been written decades ago. “So what can you do? Can you make the field bigger or whatever?” Guarino asked. “And he was just like, straight up — no! There’s nothing we can do.” That COBOL code — nobody was ever going to touch it. The state didn’t have enough money to pay for the enormous staff time it’d take to dive back into that code base.
They were also likely terrified that if they tried to change something crucial, they’d break it. This is the other paradox of COBOL’s success. Because it’s fast and it’s stable, over the years and decades, governments and banks grew to rely on those old systems. So even if you want to change them, it’s too dangerous to try. At the bank Stern worked at, you could lose hair over the stress of tinkering with truly ancient, mission-critical code.
“It was a high level of risk to fix things, because you could damage something that was already working,” she tells me. So most of the time, instead of intensively rewriting old code, they’d just add small new bits of code, patching things around the edges. “People kept adding on little pieces and little pieces, and it started to look like a little Frankenstein,” she laughed. Which, of course, only made the system potentially more inscrutable and messy to later generations.
Very, very occasionally, though, some design decision made decades ago that turns out to be so truly awful that banks and companies need — suddenly, in a panic — to dive in and gut renovate genuinely old COBOL. This is what happened with the infamous “Y2K bug”.
The Y2K bug emerged from an old design decision. When the early COBOL programmers wrote dates into their software, they used two digits: 1971 was “71”, for example. That was because the machines back in the ‘60s and ’70s had very little storage room in their memory. Removing two characters was a big deal. ”All programs were very memory conscious — every byte used to be expensive,” as Thomas tells me. Plus, the coders in the ’60s and ’70s never dreamed their software would still be in use 30 years later, when the year 2000 approached.
But as 2000 drew near, the two-digit dates became a huge dilemma. In the new millennium, the COBOL software wouldn’t know whether “00” meant 2000 or 1900. If a bank calculated interest on a deposit made on “01”, it might wrongly assume the deposit was made in 1901, and issue the customer 99 years of free interest. A huge number of bank and retail and payroll transactions all rely on dates, so billions of lines of programs needed to be updated. As 2000 approached, banks called their old-timers out of retirement, paying them to pore through the code bases, find every place dates were used, and fix things.
“We spent two-and-a-half years prepping for Y2K,” Thomas chuckles. “That’s one of the reasons that a lot of the programing guys like me know our systems so well. Because we had to go through every program.”
Even so, at Thomas’s bank they didn’t have time to truly fix the problem. In some cases, banks and firms didn’t actually change the code to use a full four-digit date like “2016”. Instead, they used a hack: a “sliding rule.” They’d pick a year far enough in the future, like 2045, and make it the new breakpoint. So if the COBOL sees a two-digit date that’s greater than 45, it assumes it’s in the 1900s — so, ”87“ means 1987. And if it sees a number lower than 45, it assumes it’s 2000s — so, “33“ means 2033.
This means, as Thomas notes, that the Y2K problem isn’t, for them, entirely fixed. They just kicked the can down the road. Come 2045, they may well be in a panic again. Which means that still more COBOL will need to be fixed by COBOL experts.
Assuming any are still alive. Craig Bailey, of the software firm Faircom, was working with some clients to help them try to migrate off their old COBOL systems. They’d work with the client, picking the brains of the older, retired employees who originally wrote the systems — but have occasionally had an old-timer die in the middle of the process.
“Literally, we get a call on a Monday morning saying, ‘Oh my god, project’s on hold — so-and-so passed away,” Bailey says.
A paradox of COBOL’s success is that because it’s so stable, even if you want to change it, it’s too dangerous to try.
Banks need to hope that those old-timers hang on as long as possible. Because there aren’t a lot of new young kids learning COBOL these days.
“We get calls from companies all [the] time, saying, ‘Hey do you have anybody who’s got any skills in COBOL?’ They’re desperate,” says Marilyn Zeppetelli, a former IBMer who worked on their mainframes, and who now is a professor at Marist College.
Marist is one of the few universities that regularly teaches COBOL. Many computer-science programs don’t, or certainly don’t promote it. Indeed, the academe has long snubbed COBOL. When the language took off in the ‘70s, elite computer scientists were scornful, arguing that COBOL encouraged terrible styles of coding that were falling out of favor. One example was the “GOTO” statement: COBOL lets you tell the program to suddenly jump from one line to another, say from line 899 to line 217. To be fair, the computer scientists had a point! This type of coding produces janky, disorganized programs that can be onerous to read (“spaghetti code,” as they call it), and languages that came after COBOL mostly abandoned GOTO. Either way, the libel stuck. For people serious about pushing the frontiers of computing, COBOL was a loser’s language, a backwater.
“The use of COBOL cripples the mind; its teaching should, therefore, be regarded as a criminal offence,” as the famous computer scientist Edsger Dijkstra wrote in 1975. COBOL was more of a working-class language, a blue-collar intrusion into the priesthood of coding. Plus, When cheaper desktop-sized PCs arrived in the ‘80s, they became the exciting new place to run code. Anyone could have one on their desk; learning COBOL required you to have access to a huge mainframe computer, which were mostly just at banks or major retailers. “When the smaller and mid-range machines really took off in popularity, [universities] moved all their education to those platforms, and the mainframe kind of fell by the wayside,” Zeppetelli notes. These days, smartphones have made COBOL even less relevant to students: “It just doesn’t seem as sexy as some of the other platforms.”
With a small incoming talent pool, many banks and governments and retailers long ago began to rely on outsourced COBOL labor. They keep a small core of coders on staff who know the language, and when they need something new written, hire firms that have phalanxes of COBOL coders, like Bill Hinshaw’s “COBOL Cowboys”, or firms in India.
Some firms, worried that it’ll be too hard to find COBOL adepts in the years to come, try to rewrite their entire system in a new language. It is nearly always a hellish task: You have to think of every single thing your complex, decades-old software does, and recreate each tiny step in a new language. Three years ago the New York Times rewrote its COBOL-based newspaper-circulation system in Java; it was successful, but took longer than expected due to the “vexing” challenge — in the coders’s words — of making sure the new system did what the old one did.
And they were the lucky ones. The Commonwealth Bank of Australia tried to rewrite a core system in a fresh language; the project cost twice as much as they expected, $1 billion in Australian dollars. Len Santalucia, the longtime mainframe expert, once worked with the financial institution DTCC to investigate the possibility of converting their COBOL to Java.
“They probably have about seventy five million lines of COBOL code,” he tells me, “and they found out that it would cost them so much that it would take, maybe, a couple of lifetimes to recover. It was ridiculous. And they have more money than God.”
So the banks shrug, and figure, screw it. If it ain’t broke, don’t fix it. Keep the old COBOL running. “These programs have been running day in, day out, 24/7 for 30 and 40 years. So why would we change it?” as Thomas says.
And in the meantime, the banks just try to encourage as many people to learn COBOL as possible. “You’d have a job for life,” Thomas laughs.
The problem for banks, though, is that while their COBOL may be stable, their customers’s expectations aren’t. As you probably realize, the landscape of the financial industry is shifting quickly. Transactions are increasingly happening on Venmo-style apps that let people ping money to friends; services like Coinbase let people buy cryptocurrency; there are new lending apps like Tala and Upstart. People now expect ever-easier ways to manage their money via software.
This is where banks, which should have inherited advantage in moving money around, have it harder. It’s difficult for them to roll out buzzy new features quickly, because they have to deal with their jurassic “technology stacks,” notes Denis Ryan, a former banker who’s now the chief growth officer for Showoff, an Irish firm that has built fintech apps. Those old COBOL-fueled backends store data in disparate chunks — “they have a lot of silos,” he notes. And it’s dangerous, of course, to tinker much with the old code: “You’ve got resource pain, technical pain, operational pain, risk pain.”
But a startup can do whatever it wants. There are no old systems. They’re in what programmers lovingly call a “green field” situation. Instead of buying hundreds of thousands of dollars worth of mainframe computers to store and process their data, they just rent space on a “cloud” system, like Amazon’s. They can write code in new languages, so they can hire nearly any eager young computer-science student. And they don’t even need to build everything themselves: When Showoff is crafting a new fintech app, it might use an existing service to handle a tricky task — like using Stripe to process payments — rather than trying to create that software themselves.
“That takes away quite a lot of the operational pain from the team, so that they can scale,” he notes, “and work on the product without having to worry as much about infrastructure.” They don’t, in other words, have any COBOL to worry about.
The problem for banks, though, is that while their COBOL may be stable, their customers’ expectations aren’t.
COBOL will probably never die. But that hasn’t stopped many coders from predicting, over and over again, that it is about to meet its doom. Indeed, the first warning that COBOL was dead came from before the language was even released.
In 1960, the committee that was devising COBOL was only one year into its work — but one member, RCA executive Howard Bromberg, was worried they were moving too slowly. If they didn’t get COBOL out faster, he reasoned, the business world would move on! Computer manufacturers would release their own unique languages, and business programming would descend into the land of Babel.
So Bromberg decided, “in a fit of pique,” to send a message to the head of the COBOL committee, Charlie Phillips, who worked for the Defense Department. Bromberg bought a tombstone, which was topped with a granite icon of a “sacrified lamb,” and had “COBOL” carved on it. (“What kind of a name is that?” the tombstone-maker asked him.)
Then Bromberg put the tombstone it in a crate and shipped it off to Phillips at the Pentagon. “There were rumors all over the industry that COBOL was dying,” as Grace Hopper later recalled.
60 years later, the tombstone is sitting in the Computer History Museum in Mountain View, California, and COBOL still runs the world.
Clive Thompson is a journalist who writes about science and technology; his latest book is “Coders: The Making of a New Tribe and the Remaking of the World”. He is a contributing writer for GFN Magazine and a monthly columnist for Wired magazine.
LPL Financial to Acquire Waddell & Reed’s Wealth Management Business and Enter Into Long-Term Partnership With Macquarie
Macquarie to acquire Waddell & Reed Financial, Inc. and upon closing sell
Waddell & Reed’s wealth management business to LPL Financial for $300 million
Long-term partnership between LPL Financial and Macquarie will provide existing
Waddell & Reed advisors and clients with continuity, as well as longer-term opportunities through partnership with a leading international asset manager
SAN DIEGO, Dec. 02, 2020 (GLOBE NEWSWIRE) — LPL Financial Holdings Inc. (Nasdaq: LPLA) (“LPL Financial” or “LPL”), a leading U.S. retail investment advisory firm, independent broker-dealer, and registered investment advisor (RIA) custodian, today announced it has entered into an agreement with Macquarie Asset Management (“Macquarie”), the asset management division of Macquarie Group (ASX: MQG; ADR: MQBKY), to acquire the wealth management business of Waddell & Reed Financial, Inc. (NYSE: WDR) (“Waddell & Reed”), upon completion of Macquarie’s acquisition of all of the issued and outstanding common shares of Waddell & Reed. Additionally, LPL and Macquarie have agreed to enter into a long-term partnership, with Macquarie becoming one of LPL’s top tier strategic asset management partners.
Through its subsidiaries, Waddell & Reed has provided investment management and wealth management services to clients throughout the U.S. since 1937. Today, investment products are distributed under the Ivy Investments ® brand, as well as through independent financial advisors associated with Waddell & Reed, Inc. As of September 30, 2020, Waddell & Reed’s wealth management business had assets under administration of approximately $63 billion, up 10% year-over-year.
Dan Arnold, President and Chief Executive Officer of LPL Financial said: “Waddell & Reed advisors are highly experienced and well-respected throughout the industry. They are a terrific fit both culturally and strategically, and we welcome them to the LPL family. Looking ahead, we expect our capabilities and resources will benefit their practices and help them unlock additional value and growth. Additionally, we look forward to deepening our long-term partnership with Macquarie, which will help us preserve unique aspects of the Waddell & Reed advisor experience while also positioning us to explore additional long-term opportunities together.”
Philip J. Sanders, Chief Executive Officer of Waddell & Reed, said: “Over the past few years, we have been focused on leveraging our strong heritage as the foundation for transforming our firm into a more diversified and growth-oriented financial services enterprise. The long-term partnership between LPL and Macquarie as part of this transaction accelerates that transformation and ultimately will benefit our clients and independent financial advisors while delivering significant value to our stockholders.”
Martin Stanley, Head of Macquarie Asset Management, said: “The addition of Waddell & Reed Financial and our enhanced partnership with LPL will significantly increase our ability to grow and invest in our combined business for the benefit of our clients. Ivy Investments’ complementary investment capabilities will provide diversification to Macquarie Asset Management’s capabilities and client base. The consideration offered reflects the quality of Waddell & Reed’s business and the future benefits of our partnership with LPL.”
Shawn Lytle, President of Delaware Funds by Macquarie and Head of Macquarie Group in the Americas, added: “This transaction is an important step forward in our growth strategy for Delaware Funds by Macquarie. The acquisition of Waddell & Reed’s asset management business and our partnership with LPL significantly strengthens our position as a top 25(1) US actively managed, long-term, open-ended mutual fund manager across equities, fixed income and multi asset solutions.”
The transaction has been approved by the Boards of Directors of LPL Financial, Macquarie Group, and Waddell & Reed and is expected to close in the middle of 2021, subject to regulatory approvals, Waddell & Reed stockholder approval, and other customary closing conditions.
LPL Financial posted an investor presentation with an overview of the transaction on its Investor Relations page at investor.lpl.com.
Centerview Partners LLC served as exclusive financial advisor and Ropes & Gray LLP served as exclusive legal advisor to LPL in connection with the transaction.
About LPL Financial
LPL Financial (https://www.lpl.com) is a leader in the retail financial advice market, the nation’s largest independent broker/dealer(+) and a leading custodian (or provider of custodial services) to RIAs. We serve independent financial advisors and financial institutions, providing them with the technology, research, clearing and compliance services, and practice management programs they need to create and grow thriving practices. LPL enables them to provide objective guidance to millions of American families seeking wealth management, retirement planning, financial planning and asset management solutions.
(+)Based on total revenues, Financial Planning magazine June 1996-2020.
Securities and Advisory Services offered through LPL Financial LLC, a Registered Investment Advisor. Member FINRA/SIPC. We routinely disclose information that may be important to shareholders in the “Investor Relations” or “Press Releases” section of our website.
About Waddell & Reed Financial
Through its subsidiaries, Waddell & Reed Financial, Inc. has provided investment management and wealth management services to clients throughout the United States since 1937. Today, Waddell & Reed Financial distributes its investment products through the unaffiliated channel under the Ivy Investments® brand (encompassing broker/dealer, retirement, and registered investment advisors), its wealth management channel (through independent financial advisors associated with Waddell & Reed, Inc.), and its institutional channel (including defined benefit plans, pension plans, endowments and subadvisory relationships). For more information, visit ir.waddell.com.
About Macquarie Asset Management
Macquarie Asset Management (MAM) is Macquarie’s asset management business. MAM is a full-service asset manager, providing investment solutions to clients across a range of capabilities including infrastructure & renewables, real estate, agriculture, transportation finance, private credit, equities, fixed income, and multi-asset solutions. As of September 30, 2020, MAM had $A554.9 billion of assets under management. MAM has over 1,900 staff operating across 20 markets in Australia, the Americas, Europe and Asia. MAM has been managing assets for institutional and retail investors since 1980 in Australia and 1929 in the US, through a predecessor firm, formerly known as Delaware Investments.
|(1)||Source: Assets under management as of Sept. 30 – Based on data represented in Strategic Insight and Morningstar. Data includes ICI Method of Sales: Salesforce, Institutional and Retirement. Data excludes Variable Insurance Products, Closed End Funds, ETFs, passive mutual funds, Money Market Funds, Delaware Pooled Trusts, and Optimum Funds.|
Statements in this press release regarding LPL Financial Holdings Inc. (together with its subsidiaries, including LPL Financial LLC, the “Company” or “LPL Financial”) and its potential growth, business strategy and plans, including the expected benefits of Macquarie Group’s acquisition of Waddell & Reed Financial, Inc. (together with its subsidiaries, “Waddell & Reed”) and LPL Financial’s acquisition of Waddell & Reed’s wealth management business and partnership with Macquarie Group, as well as any other statements that are not related to present facts or current conditions or that are not purely historical, constitute forward-looking statements. These forward-looking statements are based on the historical performance of the Company and Waddell & Reed and the Company’s plans, estimates and expectations as of December 2, 2020. Forward-looking statements are not guarantees that the future results, plans, intentions or expectations expressed or implied by the Company will be achieved. Matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, legislative, regulatory, competitive and other factors, which may cause levels of assets serviced, actual financial or operating results, levels of activity or the timing of events to be materially different than those expressed or implied by forward-looking statements. In particular, the Company can provide no assurance that the assets reported as serviced by financial advisors affiliated with Waddell & Reed (“Waddell & Reed Advisors”) will translate into assets serviced by LPL Financial, that Waddell & Reed Advisors will join LPL Financial, or that the benefits that are expected to accrue to LPL Financial, Waddell & Reed, Macquarie Group and their respective advisors and stockholders as a result of the transactions described herein will materialize. Important factors that could cause or contribute to such differences include: failure of the parties to satisfy the closing conditions applicable to the acquisitions described herein in a timely manner or at all, including the completion of the acquisition of Waddell & Reed by Macquarie Group, obtaining the required stockholder and regulatory approvals, and the retention by Waddell & Reed of minimum assets prior to closing; disruptions to the parties’ businesses as a result of the announcement and pendency of the transactions, difficulties and delays in recruiting Waddell & Reed Advisors or onboarding the clients or businesses of Waddell & Reed Advisors; the inability by the Company to sustain revenue and earnings growth or to fully realize revenue or expense synergies or the other expected benefits of the transactions, which depend in part on the Company’s success in onboarding assets currently served by Waddell & Reed Advisors; disruptions of the Company’s or Waddell & Reed’s business due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with its financial advisors and their clients, employees, other business partners or governmental entities; the inability to implement onboarding plans and other consequences associated with acquisitions; the choice by clients of Waddell & Reed Advisors not to open brokerage and/or advisory accounts at LPL Financial or move their assets from Waddell & Reed to LPL Financial; unforeseen liabilities arising from the acquisition of Waddell & Reed’s wealth management subsidiaries; changes in general economic and financial market conditions, including retail investor sentiment; fluctuations in the value of assets under custody; effects of competition in the financial services industry, including competitors’ success in recruiting Waddell & Reed Advisors; and the other factors set forth in Part I, “Item 1A. Risk Factors” in the Company’s 2019 Annual Report on Form 10-K and any subsequent SEC filing. Except as required by law, the Company specifically disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this press release, even if its estimates change, and you should not rely on those statements as representing the Company’s views as of any date subsequent to the date of December 2, 2020.
First Responder Announces Proposed Transaction with Airbeam Wireless Technologies
/Not for distribution to U.S. news wire services or dissemination in the United States/
Homegrown Canadian Disruptor Enters 5G-Edge Technology Race
Proposed Entity to Build Innovative Technology Stack for Smart Cities
VANCOUVER, BC, Nov. 30, 2020 /CNW/ – First Responder Technologies Inc. (“First Responder” or the “Company”) (CSE: WPN) (OTCQB: WPNNF) (FWB: 3WK), a leading developer of public safety and security technologies, is pleased to announce that it has entered into a letter of intent dated November 27, 2020 (the “LOI“), which sets out the basic terms and conditions for the acquisition (the “Acquisition“) by the Company of all of the issued and outstanding common shares in the capital of Airbeam Wireless Technologies Inc. (“Airbeam“) in exchange for common shares in the capital of the Company (the “First Responder Shares“). The Acquisition is expected to be structured as a reverse takeover and will constitute a “fundamental change” for the Company pursuant to the rules and policies of the Canadian Securities Exchange (the “Exchange“). The Acquisition is an arm’s length transaction. Upon successful completion of the Acquisition, it is anticipated that the resulting entity (the “Resulting Issuer“) will continue the combined businesses of Airbeam and First Responder under a name to be determined by the parties.
Creating a Canadian National Leader in Emerging 5G-Edge Enabled Smart City Technologies
Over the past decade, governments, privacy commissioners and industry have been working together to develop a roadmap to realize the potential of 5G for the development of Smart Cities in North America, and around the world. The Acquisition proposes to create a Canada-based leader in this important sector, with privacy at the core of the Resulting Issuer’s approach to product development.
As a result of the Acquisition, the Resulting Issuer is expected to develop and sell a complete Canadian-owned technology solution – chip, hardware, software and services – that could reduce Canadian dependence on foreign-owned 5G networking hardware and software.
The combination of Airbeam’s 60GHz millimeter wave (“MMW“) chipset, and Smart City networking hardware and services, together with First Responder’s innovative AI-enabled weapons detection camera and Wi-Fi-based concealed weapons technology, may create a new capability in the public safety and security segment, an important and fast emerging segment of the Smart City vertical. This new public safety infrastructure developed by First Responder, and powered in the future by Airbeam’s 60GHz chipset, may then be utilized as “edge networking nodes” as 5G networks densify, which can offer wireless backhaul, edge computing and networking capabilities to overcome anticipated bottlenecks in the current infrastructure.
“Airbeam remains one of the few independent 60GHz MMW chipset and system solutions available in the market. Combining Airbeam’s technology and highly experienced leadership team with First Responder’s executive team, advisory council and capital markets vehicle, creates a unique opportunity to develop a full stack technology offering that may enable an industry leader to emerge in North America in the 5G-Edge networking and public safety segment of the Smart City vertical,” said Dr. Karim Arabi, Chairman of Airbeam.
In the future, the Resulting Issuer anticipates developing unique hybrid appliances, which may combine some or all of 5G small cell, edge compute, wireless backhaul, computer vision and AI capabilities, which may enable new and unique Smart City applications to be developed for transportation, municipal infrastructure and public safety that have the potential to directly impact daily life in North American cities and beyond. Given the privacy concerns that attend to such capabilities, the Resulting Issuer is expected to continue a process started by First Responder that will integrate privacy considerations from the earliest stages of product inception, and work with third-party privacy advocacy groups and privacy commissioners to ensure that the benefits of this new capability also preserve the privacy and liberty of North American and international customers.
“In the GFN of First Responder’s management, this is an exciting opportunity for Canada and Canadians to potentially replace dependence on foreign 5G networking hardware and software at the edge, with a homegrown solution to develop 5G hardware, software and integrated solutions, which may be the foundational technology for Smart Cities of the 21st century, in North America, and around the world” said Robert F. Delamar, CEO of First Responder and proposed CEO of the Resulting Issuer.
Airbeam is a private company existing under the laws of British Columbia and is based in Richmond, British Columbia. There are currently 64,551,545 common shares in the capital of Airbeam (the “Airbeam Shares“), 3,500,000 restricted shares, 1,000,000 restricted share units and 669,999 common share purchase warrants outstanding.
Airbeam is a developer of 5G-enabled Smart City technologies, which sells a proprietary 60 GHz millimeter wave (“MMW“) chipset, hardware and software, which cost in excess of $110 million USD to develop by a leading semiconductor company from which it was acquired.
As of the date hereof, no meaningful financial information has been prepared by Airbeam. Airbeam will prepare audited financial statements in the near future and the Company will provide a summary of significant financial information in due course.
The Company and Airbeam have entered into the LOI, which sets out certain terms and conditions pursuant to which the proposed Acquisition will be completed. The transaction terms outlined in the LOI are subject to the parties successfully entering into a definitive agreement (the “Definitive Agreement“) in respect of the Acquisition on or before February 12, 2021 or such other date as the Company and Airbeam may mutually agree.
The LOI also contemplates other material conditions precedent to the closing of the Acquisition (the “Closing“), including the completion of a bridge financing to raise minimum aggregate gross proceeds equal to such amount required to fund First Responder until the completion of the Acquisition (the “Bridge Financing“), the completion of a concurrent financing to raise minimum aggregate proceeds equal to such amount required to provide the Resulting Issuer with sufficient working capital for a minimum of 12 months following the completion of the Acquisition (or such other amount as may be agreed upon by the parties) (the “Concurrent Financing“), customary due diligence, compliance with all applicable regulatory requirements and receipt of all necessary regulatory, corporate, third-party, board and shareholder approvals being obtained, including the approval of the Exchange. There can be no assurance that the Acquisition will be completed as proposed, or at all.
It is anticipated that the Closing will involve, among other things, the following steps, which may be amended if the parties mutually agree that such form would better satisfy their objective (including but not limited to, tax efficiency to the parties):
- prior to the closing of the proposed Acquisition, the Company will consolidate its share capital on a basis to be determined by the parties (the “Consolidation“);
- the shareholders of Airbeam will receive post-Consolidation First Responder Shares in exchange for their Airbeam Shares pursuant to an exchange ratio to be determined by the parties;
- completion of the Bridge Financing of First Responder securities to be priced in the context of the market;
- completion of the Concurrent Financing of Airbeam securities or First Responder securities, as may be agreed upon by the parties, to be priced the context of the market but in no event less than the offering price of the Bridge Financing;
- receipt of all director, shareholder and regulatory approvals relating to the Acquisition and the Concurrent Financing, including, without limitation, the approval of the Exchange; and
- each of the parties shall have executed, delivered and performed their respective covenants as outlined in the Definitive Agreement, and all representations and warranties of each party contained in the Definitive Agreement shall be true and correct at the time of Closing.
Certain of the First Responder Shares issuable pursuant to the Acquisition may be subject to the escrow requirements of the Exchange and to hold periods as required by applicable securities laws.
The Company and Airbeam, as applicable, may pay finder’s fees in connection with the Bridge Financing, the Concurrent Financing and the Acquisition up to the maximum permitted under the policies of the Exchange.
The Resulting Issuer – Summary of Proposed Directors
It is currently anticipated that certain of the current officers and directors of the Company will resign from their respective positions with the Company.
Following the Closing, the board of directors of the Resulting Issuer is expected to consist of seven (7) directors, four (4) of which will be nominees of Airbeam and three (3) of which will be nominees of the Company.
Dr. Karim Arabi, current Chairman of Airbeam, and Mr. Wayne Lloyd, current President of Airbeam are expected to become directors of the Resulting Issuer. Robert Delamar is expected to be Chief Executive Officer and a director the Resulting Issuer. Naresh Singhal is expected to be Chief Technology Officer, but not a director of the Resulting Issuer, with other officers to be determined in due course by the board of directors of the Resulting Issuer.
The following is a brief description of the known directors and officers of the Resulting Issuer who have been identified as of the date hereof:
Dr. Karim Arabi – Chairman
Dr. Arabi is a seasoned executive with extensive leadership experience in the semiconductor and telecommunications industry. Previously, VP of R&D at Qualcomm, Dr. Arabi also held a diverse portfolio of other roles there, such as head of the ASIC research department responsible for Advanced Wireless and Computing Technologies, and VP of Engineering, Mobile SoC Design. He also served as VP, Engineering at Dialog Semiconductor, working on semiconductor products for mobile devices. Dr. Arabi has had several successful technology exits in the semiconductor sector most recently commercializing an innovative power supply chipset for mobile devices enabling higher efficiency and more compact products.
Wayne Lloyd – Director
Mr. Lloyd is an entrepreneur and technology executive with extensive capital markets experience. Mr. Lloyd currently serves as the Chief Executive Officer of Tracesafe Inc., is founder of Consensus Core, and has extensive experience scaling start-ups, special situation investing, and completing complex M&A transactions in the technology sector. Mr. Lloyd has helped raise millions in capital to grow businesses and has a proven track record of attracting world class talent to start-up ventures. Mr. Lloyd earned a CFA charterholder designation in 2015.
Robert Delamar – Chief Executive Officer
Mr. Delamar is a lawyer and high technology CEO with almost 20 years of experience developing and leading technology companies in Silicon Valley and around the world. After starting his career in Silicon Valley, Robert returned to Vancouver to complete law school at UBC and articled at Blake, Cassels & Graydon in Vancouver. He was called to the bar of British Columbia in 2004. Immediately after his call to the bar, Mr. Delamar left Vancouver to work in the high-tech corridor situated outside of Washington, DC, where he worked at a mobile satellite networking company in a business development role, and co-founded a social media start-up. Following a brief return to Canada to practise law as a civil litigator, in 2011 he was recruited to serve as founder and CEO of a video streaming technology start-up company, owned by a major Latin American media and telecommunications conglomerate, which through a series of transactions became UUX, Inc., which was later acquired by Spain’s Agile Content, SA. While at UUX, Inc., Mr. Delamar led a sales effort focused on major international mobile telecoms companies. Between 2014 and 2016 Robert split his time between Vancouver and Silicon Valley, where he co-founded and served as CEO of a green refinery development company, and served as Co-CEO of a peer-to-peer networking company. In July of 2019 Mr. Delamar accepted the appointment as CEO and member of the board of directors for First Responder Technologies Inc.
Naresh Singhal – Chief Technology Officer
Mr. Singhal has more than 30 years of experience in the technology industry in a variety of domains and industry verticals. He completed a B.S. (Honors) in Electronics and Communications Engineering from National Institute of Technology, India, and professional development coursework from Stanford University. He holds one technology patent, with several others pending. Mr. Singhal started his career as a Scientist with India’s Defense Research & Development Organization (“DRDO“), where he led some prestigious defense projects. After the DRDO, Mr. Singhal moved to the United States and worked at a number of different startups. At Entrisphere Inc. (“Entrishphere“), he built Network Management Systems for next generation optical networking products. Entrisphere was acquired by Ericsson and helped Ericsson get a foothold in the wireline business, selling these products to the major Regional Bell operating companies AT&T, Verizon and BellSouth, in response to a multi-billion dollar request-for-proposal. Subsequently Mr. Singhal led engineering at streaming media startup Sezmi, which went through several acquisitions and mergers before becoming UUX Inc.. As VP of Engineering at UUX, he helped create the world’s first truly converged internet TV as-a-service platform, that combined linear (live) television and Over-the-Top television in an intuitive multi-device user experience. Most recently, Mr. Singhal was Chief Technology Officer at Trunomi, a fintech startup building technology for privacy and data rights management, in response to regulations like the EU General Data Protection Regulation, amid increasing concerns about how corporations misuse personally identifiable information.
Further details concerning the management and directors of the Company will be provided in a comprehensive press release when the parties enter into the Definitive Agreement and in the disclosure document to be prepared and filed in respect of the Acquisition.
Trading in First Responder Shares
Trading in the Company’s shares has been halted in compliance with the policies of the Exchange. Trading in the Company’s shares will remain halted pending the review of the proposed Acquisition by the Exchange and satisfaction of the conditions of the Exchange for resumption of trading. It is likely that trading in the shares of the Company will not resume prior to Closing.
Disclosure and Caution
Further details about the proposed Acquisition, the Bridge Financing, the Concurrent Financing and the Resulting Issuer will be provided in a comprehensive press release when the parties enter into the Definitive Agreement and in the disclosure document to be prepared and filed in respect of the Acquisition. Investors are cautioned that, except as disclosed in the disclosure document, any information released or received with respect to the Acquisition may not be accurate or complete and should not be relied upon.
All information provided in this press release relating to Airbeam has been provided by management of Airbeam and has not been independently verified by management of the Company.
As the date of this press release, the Company has not completed a Definitive Agreement with Airbeam and readers are cautioned that there can be no assurances that a Definitive Agreement will be executed, or that the Acquisition will be completed.
No securities regulatory authority has either approved or disapproved of the contents of this news release. The securities of the Company have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States, or to or for the account or benefit of any person in the United States, absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any common shares in the United States, or in any other jurisdiction in which such offer, solicitation or sale would be unlawful.
On behalf of the Board of Directors,
“Robert F. Delamar”
Robert F. Delamar, CEO
First Responder Technologies Inc.
915 – 700 West Pender Street
Vancouver, BC. V6C 1G8
About First Responder Technologies Inc.
First Responder Technologies Inc. (the “Company“) is a technology development company that commercializes academic and internally developed intellectual property for use in the public safety market. The Company is developing a WiFi-based technology, based in part, on academic research licensed from Rutgers, the State University of New Jersey (“Rutgers“) that can be used to detect concealed weapons. The Company’s threat detection technology line of business was created to capture a significant portion of the global weapons detection systems market, and in particular, the global perimeter security detection market. In the Company’s view, WiFi–based threat detection technology may be utilized by a wide range of facilities, including schools, places of worship, shopping centres and theatres, to not only make their premises secure, but also reduce their cost of security, from the interior of a facility to the perimeter.
For more information visit: www.firstrespondertech.com or follow us on Twitter, LinkedIn and Facebook.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this news release may constitute forward–looking information, including statements relating to the completion of the Acquisition, the proposed business of the Resulting Issuer, the completion of the Bridge Financing, the completion of the Concurrent Financing, the proposed directors and officers of the Resulting Issuer, the completion of the Consolidation, shareholder, director and regulatory approvals, and future press releases and disclosure. Forward–looking information is often, but not always, identified by the use of words such as “anticipate”, “plan”, “estimate”, “expect”, “may”, “will”, “intend”, “should”, and similar expressions. Forward–looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward–looking information. The actual results of the Company, Airbeam or the Resulting Issuer could differ materially from those anticipated in this forward–looking information as a result of regulatory decisions, competitive factors in the industries in which the Company and Airbeam operate, prevailing economic conditions, changes to the Company or Airbeam’s strategic growth plans, and other factors, many of which are beyond the control of the Company and Airbeam. Each of the Company and Aiream believe that the expectations reflected in the forward–looking information are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward–looking information should not be unduly relied upon. Any forward–looking information contained in this news release represents the Company and Airbeam’s expectations as of the date hereof, and is subject to change after such date. Each of the Company and Airbeam disclaim any intention or obligation to update or revise any forward–looking information whether as a result of new information, future events or otherwise, except as required by applicable securities legislation.
Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE First Responder Technologies Inc.
For further information: Please Contact: General Inquiries: [email protected]; Investor Relations: Lyle McLennan, [email protected]; Media Contacts: Jeff Rutledge, [email protected]
Here’s how technology has evolved over the past two decades
In the summer, I went camping with my friends. On the first day after our arrival, I woke up early to take a walk and pick some chanterelles for breakfast. As bad luck would have it, however, I left my glasses in the tent, and without them, I struggle to tell mushrooms apart. Still, I resolved to carry on, and having collected a handful of becapped specimens I returned to our camp.
My friends, still fast asleep, did not take me up on my breakfast offer, so I ate my tofu and mushroom scramble alone. And seeing the effect it had on me, I quickly realized I had accidentally collected some mushrooms from the <em>Psilocybe</em> genus. This little mishap was a surprise, but I didn’t let it throw me off balance – I let the psilocybinous song carry me away. And now, I shall report on the places I visited and the things I saw. If I find the right words, that is.</p><p>The ground began to rumble, or maybe rather stir and writhe, as if there was a gargantuan snakelike creature breathing underneath its surface. A low murmur and chemiluminescent glow seeped from between patches of moss and foliage. Greenish tentacles glimmered in the murky ground, twisting and turning, and showed me the way towards the heart of the forest. I recognized those viridescent threads to be mycelium, made of the hyphae that are the basis of fungi’s organization system, whereas the glow seemed to be caused by luciferins – a protein capable of emitting light as the result of an enzymatic reaction. Once this mycological phenomenon dawned on me, I was no longer anxious and walked ahead.</p><p>As I was forcing my way through the thicket, in my mind I tried to systematize all the information about fungi I have learned. They are a kingdom that belongs to the group of eukaryotes, which encompasses all cellular organisms that pack their genetic material into chromosomes kept in their cells’ nuclei. This makes them quite similar to humans, which convinced me even more that I could trust the call that beckoned me forward, especially since those organisms boast ancient evolutionary history. The oldest fossils that have been identified as remnants of fungi are estimated to be around one billion years old, which indisputably proves the primaeval nature of the wisdom that summoned me.</p><p>With every step that brought me closer to the heart of the land, I could hear the commotion of heated dispute grow louder around me. Then I remembered a certain theory linking the consumption of hallucinogenic mushrooms by the ancestors of contemporary humans with the development of our consciousness. If not for the phenomenon of synaesthesia, the meaning of the conversations I heard would surely have been lost on me. After all, fungal communication happens noiselessly, with the aid of chemical substances that flow through the mycelium. Luckily, I could feel the vibrations of the ground and electromagnetic impulses, catching even the tiniest of signal molecules so that I understood everything that was being said.</p>
<p>I finally arrived at an arena shaped like an ascocarp, the fruiting body of the sac fungi. In the stalls sat tens of thousands of various species of fungi, with the elders occupying the seats at the top of the assembly hall, chaired by the Hatter who looked strikingly similar to the well-known and liked Jersey cow mushroom.</p><p>Silencing the crowd, he announced:</p><p>”Welcome, human, son of mycelium.”</p><p>”Greetings to you, my brothers,” I answered kindly, filled with a feeling of unity with all the organisms that surrounded me.</p><p>”Your current state is no accident. You have been chosen from all the <em>Homo sapiens</em> to help us solve the most pressing problems of the modern world. Are you ready to serve our cause?”</p><p>”If you’re talking about the same problems that gnaw at my mind every day, I will be happy to help,” I said to him, but felt that I had addressed each and every fungus individually, as they were an inseparable entity.</p><p>”We know your thoughts, but it might be more anthropomorphic-friendly to allow you to express your worries about the state of the world verbally. As a kingdom of sage species, we have decided to try and save our shared motherland. The only one we all have.”</p><p>”It would be very helpful if I did a quick recap of what we know about you. Please, don’t get me wrong. In my current state, nothing is certain, and such a historic exchange deserves to be fully comprehended by both sides.”</p><p>”We know what you mean. And we would very much like to know what you, humans, think of us exactly.”</p><p>”As far as I’m aware, you were classified as plants for a long time. Your ability to move is far from impressive, and you seem to be well-rooted in the soil. Even mycelium is deceptively similar to plant roots. What is it that makes you different from other kingdoms of the living world?”</p><p>”Actually, some of us can move at a rather speedy pace, and several characteristics differentiate us from plants. First, we have no tissue. Our bodies are made entirely of thickly weaved mycelium. Also, we are heterotrophs, meaning that we absorb nutrition from other organisms, namely decomposing organic matter. Of course, we help it decompose through releasing our digestive enzymes into the environment. This ability makes us the main cleaners of the natural world. We can also feed parasitically, hunt, and cooperate with autotrophic organisms.”</p><p>”But you are not only what you eat?”</p><p>”We are also different from other organisms on a biochemical level. We have our cell walls just like plants do, and they serve the same purpose – to protect the inside of the cell. Interestingly, however, the main ingredient of our walls is not cellulose, as it happens for plants, but chitin, a polysaccharide also found in the exoskeletons of various insects. It’s easy to tell us apart from animals because we use ergosterol instead of cholesterol to build our cellular membrane. But actually, on a genetic level, we are more closely related to animals than we are to plants.”</p><p>”And I imagine this genetic similarity must be the reason for the brotherly feeling that overwhelms me so. I have heard some rumours about the largest organism on our planet. They say it’s a fungus that weighs 440 tonnes! I must say, I find it quite hard to comprehend. If that were true, its cap would be visible from space.”</p><p>”You are taking it a little too far. Cap-and-stem fungi are called mushrooms. They are the fruiting bodies of a fungus. Its essence that is mycelium remains hidden underground and only grows above it to reproduce. It is the mycelium of our stumpy brother that you believe to be the largest living organism. Unfortunately, he could not make it to our meeting. He is a little listless due to his impressive age and bulk. Nobody can remember it very well, but he claims to be more than 2500 years old.”</p><p>”Please, do send him my regards. There is another question I must ask you, though. I have heard a lot about some pioneer species, capable of preparing a low-grade environment for being populated with more demanding species, including herbaceous plants. That makes it just one step away from a fully-developed ecosystem.”</p><p>”Thanks to the wide range of enzymes we produce, we can decompose next to everything! We are not intimidated by rocky areas and conflagration sites. Mycelium and spores can be found even by receding glaciers and in the desert. By processing unwelcoming environments, we create a layer of fertile ground on which life can thrive. It was thanks to us that the first plants could populate dry land. But enough about us. Now it’s time to discuss the problems you have caused for the Earth, and which we can solve. Ask ahead.”</p><p>”You have been around for a long time, so you must be familiar with the history of fossil fuels. We use them as our energy source. We do it by burning them, and while doing so, we release greenhouse gases into the atmosphere. Recently, this has become a burdensome issue for our civilization. What should we do?”</p><p>”Forests sponge up more than one-third of all CO2 emitted by the plunderous consumption culture of the current era, aptly named the Anthropocene. Plants absorb CO2 and transform it into biomass in the process of photosynthesis. And while we fungi do not photosynthesize, our role in the accumulation of CO2 could hardly be overstated. By establishing symbiotic relationships with plants, we increase the speed of their growth and improve their quality of life. When your scientists compare the efficiency of CO2 ‘cleaning’ in a forest with a low level of mycorrhiza – that is the coexistence of plants and fungi – and a forest with a high level of such interaction, it becomes clear that fungi-rich ecosystems manage this task much better. We must, however, bring another issue to your attention. CO2 is not the only by-product of your activity. Pollution caused by nitrogen compounds is also very impactful, and we aren’t very fond of them. Take care of us, and we will take care of you.”</p><p>”I shall do whatever I can to convince my people. And speaking of fossil fuels, another issue comes to mind. When we extract and transport petroleum, we sometimes cause spills that pollute the environment. Do you have any advice in this department?”</p><p>”It is but a simple matter. We have several families in our ranks who can digest the hydrocarbons that make up this black gore. Other living organisms can use the products of its decomposition. Not only do we purify contaminated soil, but we can also cooperate with plants that grow there, and help them survive. In the right conditions, petroleum waste could become incubators of earth.”</p><p>”It seems that some of our most pressing ecological issues could be tackled with fungal power. But we also have other problems at hand. Human life is becoming longer than ever, and as we age, our health begins to deteriorate. We suffer from all sorts of ailments, from cancers to metabolic diseases, such as diabetes. Could fungi heal us?”</p><p>”Oh, dear human, you surely know that many medicines are produced with the use of fungi. Baker’s yeast, which you have been using for years to make bread, wine and beer, is also used in micro-factories.”</p><p>”That is true. We discovered the genome <em>Saccharomyces cerevisiae</em>, which allowed us to understand many biological processes. The similarities between human and fungal cells are staggering. This species of yeast is a model organism, commonly used in scientific research. We can even use yeast to produce insulin, a hormone that is indispensable in treating diabetes, one of our civilization’s diseases.”</p><p>”I am proud of you humans. But remember that you have brought upon yourselves so many of those problems that you are so proud of fixing.”</p><p>”You’re right, and many of them remain unsolved.”</p><p>”I won’t tell you not to worry, but do not abandon hope. We fungi are very fond of Russian literature. One of us, the chaga mushroom that grows on birches, is the protagonist of Aleksandr Solzhenitsyn’s novel<em> Cancer Ward</em>. An infusion made of this arboreal growth has incredibly potent healing abilities: it regulates blood pressure, relieves stomach ulcers, and it can even stop the development of some neoplastic cells. It is also used to treat HIV-positive patients.”</p><p>”I have read this book, and I’d hardly consider the chaga its main character.”</p><p>”Do you want our help or not?”</p><p>”I’m sorry.”</p><p>”It doesn’t matter. Our time is almost up. I can feel the serotonin receptors in your body are almost depleted. In a few moments from now, we will no longer be able to communicate. But do take these leaflets with you, they contain some useful information and interesting facts. Whether you choose to use them and save our shared home or not, is your decision. Goodbye, human, and remember: we are always with you, inside you, and around you. Farewell!”</p><p>*</p>
<p>When I came to, I was lying in a beautiful forest clearing, a handful of leaflets in my fist. The mycelium’s hyphae, which seemed to have coiled around my body, were now receding back into the depths of the fungal world. The clearing looked like an endlessly pulsating mandala, in which the fate of our planet was written. It is up to us whether and how we read them. Fungi are a vast, diverse kingdom, and scientists will need many more years to explore them. They have the potential to solve a number of issues that haunt our civilization. Will we accept the helping stem that they are offering?</p><p>For a few more minutes, I daydreamed. I pondered the challenges that loom over humanity. The thoughtless destruction of our environment. Of the natural magic that seems to be the key to the door of perception and survival. Then I heard the voices of my friends and of the fungi that live within them calling me. They didn’t want to believe my story, but I very much hope that at least some of the fungal wisdom can seep through and into the thallus of <em>Homo sapiens</em>. After all, they gave me leaflets!</p><h3><em>LEAFLETS</em></h3><h3>Decontamination of flat surfaces</h3><p>Another nuclear reactor failure? Are the usual cleaning methods not good enough? Is your kitchen covered in radioactive ash? Or perhaps only cockroaches have survived, and you don’t know whom you should call for help? Try the slimy spike-cap!</p><p>This inconspicuous clammy mushroom is capable of absorbing huge amounts of the radioactive isotope caesium-137, thus immobilizing it. The mushrooms can then be picked and burned in a controlled environment, creating radioactive ash, which enables a much easier way of storing or further processing. The concentration of caesium-137 in the slimy spike-cap can be up to 10,000 times higher than in the environment around it. So put on your hazmat suit and go sporulate some mushrooms.</p><h3>Psylololo</h3><p>Psst! Looking for some mystical experiences? Fancy feeling at one with nature and the shamans that surround you? Or maybe you’re after vivid, colourful hallucinations? Come and join the <em>Psilocybe</em> circle, where colours have flavours, and all existential dread fades away!</p><p>Psilocybin, produced by our clever little brothers, has been known to humanity since the dawn of time. It is suspected to have contributed to the development of human consciousness and to have helped shape our spirituality, leading to the creation of religion. Today, it is used mostly for recreational purposes and in <a href=”https://przekroj.pl/en/society/leaving-your-ego-behind-tomasz-stawiszynski” target=”_blank”>therapy.</a> They say that once the door of perception is open and we see things as they really are, everything else will fall into place. We don’t promise that we can save the world, but it’s worth giving us a chance. Under specialist supervision, of course!</p>
<h3>Mushroom meat</h3><p>Are animal-borne diseases giving your civilization grief again? Has factory farming finally been recognized as animal violence? Perhaps you disagree with the concept of using animals as a source of protein in your diet, but you cannot imagine life without a tasty burger? The answer is already here: Quorn, the meat substitute made of <em>Fusarium venenatum</em>!</p><p>This spelling nightmare is, in fact, a delicious mushroom that grows in a sterile bioreactor, where it needs glucose and nitrogen to grow, and is later enriched with vitamins and mineral compounds. The final product is rich in proteins and fibre, has very little saturated fats, and has an exceptionally low track record of allergic reactions. On top of it, Quorn’s carbon footprint is 80% lower than beef’s. So far, the mushroom is known mainly in the West, but its popularity is growing fast – we can expect to see it on our plates sooner rather than later.</p><h3>Will work for food</h3><p>Reliable and hardworking fungus is looking for employment as polyethene waste utilizer. The issue of excessive amounts of plastic waste in the environment is prevalent, and humans are still looking for new ways to utilize them. My brother <em>Aspergillus terreus</em><em> </em>and I, <em>A. sydowii</em>, will happily take it upon ourselves to solve this pressing issue. Can work under challenging conditions with no special equipment required – we produce all of our enzymatic instruments ourselves, and they are perfect for softening and decomposing polymers. We would also like to use this opportunity to recommend the services of our good friend the oyster mushroom, who specializes in the production of environmentally-friendly biodegradable materials that could soon replace the outdated plastics. Feel free to get in touch.</p><h3>Yeast looking for eukaryote</h3><p>I am one of the best-known organisms on the planet, so how come we haven’t met yet? Tired of sexless germination, I am looking for the possibility of genetic recalibration to enrich my genome and establish a stable romantic relationship.</p><p>My full name is <em>Saccharomyces cerevisiae</em>, although I prefer to be called yeast. My career in the baking industry took off back in the times of the pharaohs. I’m still in touch with my friends and acquaintances in that part of the world, so if we get to know each other better, we can go for an exotic trip with a local guide. The baking business turned out to be very lucrative, but I didn’t see it as much of a challenge, which pushed me to keep expanding my horizons. Maintaining my signature freshly-baked bread scent, I tried my hand at alcohol fermentation. But don’t think me some shady moonshiner! I am a master of biochemical transformations, which I can prove with my vast portfolio of carbohydrates that I change into energy and ethanol. I’m comfortable with oxygen, but oxygen-free environments are also perfectly fine.</p><p>Being a fungus of success, I could never sit back for too long. I decided to try my hand at science next. I was hired as a model organism – not that I had to try very hard, considering my impressive skill set. A single-cell organism capable of growing in all kinds of conditions, a master of mitosis, who easily adapts to molecular modifications, has a lot in common – genetically at least – with more complex eukaryotes, including humans. In short, I am your perfect candidate. My academic interests include synthesizing medicines and hormones, ageing research, unveiling the secrets of cellular divisions and their accompanying DNA repairs, and intensification of mitochondrial mysteries. Lately I have become an avid fan of astrobiology, having visited the circumterrestrial orbit, and am planning a flight to the heliocentric orbit next. And while my genetic information isn’t exactly a scientific enigma, I still have a delicious secret or two to share. If you think you might be interested, swipe right. We’ll have a pastry, brew some wine, and if there’s a spark, we can try some conjugation.</p><p><em>Translated from <a href=”https://przekroj.pl/nauka/mysli-maslaka-tomasz-sitarz” target=”_blank” rel=”noopener noreferrer”>the Polish</a> by Aga Zano</em></p><p>Reprinted with permission of <a target=”_blank” href=”https://przekroj.pl/en/” rel=”noopener noreferrer”>Przekrój</a>. Read the <a href=”https://przekroj.pl/en/science/the-magic-of-mushrooms-tomasz-sitarz” target=”_blank”>original article.</a></p>
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