Happy Monday! Hope y’all had a great weekend and stayed in to participate in the curfew. Seems like some of the states have enacted stricter orders for the next couple of weeks (Delhi, Maharashtra) that will probably be extended for a while. It’s interesting to me that a lot of my “normal” activities are going online- we threw a Zoom birthday party for a friend on Friday with multiple breakout rooms (it was a hectic but interesting experiment) & Formula 1 has gone online with current & past drivers taking part in e-sports races, albeit much shorter but still quite fun. In today’s stories we have a piece by Sajith Pai (VC @ Blume) on how COVID is impacting companies differently and what a post-COVID world would look like. And secondly a recap of a call-to-action by Girish (Founder @ Freshworks) to startups (targeted to SaaS cos but applicable to all) on how to navigate the next month and following quarter.
So the first thing that Girish says, which I agree with 100%, is that the security & safety of your employees should be the #1 priority right now. Most companies probably have mandatory WFH policies in place by now but should also ensure that employees are being given ample time to figure out how to be productive in this new environment, rather than forcing them to sit in front of their computers on Zoom calls all day.
The impact on businesses in Q1 hasn’t been terribly bad but he expects it to get significantly worse in Q2 with economies of countries who aren’t able to mitigate it very early on being impacted quite severely.
Companies need to focus on reducing their burn and going into a conservative spending mode, which might include examining revenue cycles, cut down on new initiatives, etc.
He also expects funding to slow down to some level with a) VCs being more restrictive in backing companies (and potentially look to shore up their current investments) and b) LPs portfolios on the public markets getting impacted which might lead them to slow down their venture investments as well.
But I’ll reiterate the point I said a couple days ago, companies that survive this economic recession will come out much stronger on the other side and will probably be able to thrive in the post-COVID world.
Sajith talks a lot about how certain kinds of companies are doing well in the crisis while others have had their business restricted severely.
Companies & services related to bringing people together at a point (airports, gyms, education institutes) have been impacted severely while companies that let consumers use products & services without being present around other individuals (streaming, digital payments) are growing in usage.
Another distinction that I personally wanted to bring about in these times (that only applies to the COVID pandemic and won’t persist after) is that businesses that are essential to daily life have seen an increased growth in usage (food, services related to work) while businesses not as essential have been badly impacted and might die out (the experience economy) if they don’t adapt.
The post COVID world might have a lot more singular services with added social aspects to enhance the experience- a possible gamification + a more social version of online education platforms (US colleges are already operating on Zoom and students want Zoom to have more social features), fitness devices like the Peloton, Tonal or virtual personal training platforms like Future Fitness gaining prominence while replacing the in-gym experience.
I personally see a whole new wave of video & audio social apps coming out of this pandemic. We might have a lot more asynchronous communication platforms with a focus on video or audio forms (as opposed to text) with the formats becoming the new norm after months of social distancing. There might be a whole wave of new online social interaction experiences that might come out of this (how does this impact gaming, dating, cooking) which will be interesting to see.
And I will end this with Sajith’s quote: “Welcome to the post-Covid world. Where the products are singular (or single-serve), social and streamed.”