Four months ago, I predicted the winners of the downturn. Since then, many things have happened. As we are regaining our 'partial' freedom, it is time we think about what's next.
We like to enjoy life, that's great, just a bit too much for these days...
In a previous post, I speculated that 'this crisis might disappear as quickly as it arrived'. I fear that I was wrong. I was at a small birthday dinner last weekend. It was terrific, except that people very quickly stopped to respect social distancing... We will probably see more of these headlines in the coming weeks and months.
The recovery that started out like a V Is changing shape. The economy has shown signs of sputtering in the past two weeks. Not because we could not handle COVID-19, but because people are not taking the risks we are facing seriously enough.
Our current behavior will drive the continuous appearance of infection surges, local lockdowns, and, as a result, consumer spending drops.
Our new normal. What does it look like?
The masks won't go away before 2021. The NYTimes asked 511 epidemiologists on when they expect to resume key activities of daily life.
Let's first have a look at the activities people expect to pick up quickly, leaving aside the 'Never Agains', who seem destined to be holed up in their bunkers for eternity ;)
Regional traveling, small group gatherings, schools, and local services such as hairdressers are already on their way to be fully back. However, people do not expect to use public transport, go to the gym, eat at a restaurant, or travel by plane anytime soon.
What are the industries that will have the hardest time over the next year?
While people are craving for events, they will not happen anytime soon. Events are likely to be the category that will continue to be the hardest hit. Unless there’s an effective vaccine or treatment first, it will be more than a year before people will go out again with strangers, go to concerts, sporting events, funerals, weddings, or religious services.
An entertainment empire goes bust.
The bankruptcy of the Cirque du Soleil came as a shock for many. It represents the first global brand name that is going out of business. We can expect more to follow. Spectacular moves, such as by the organizer of Wimbledon, who was many years ago predictive enough to insure itself against a worldwide pandemic, are the exception.
Eventbrite, the leading event booking platform, saw its share price drop by over 60% in less than two months from around $22 to stabilize at about $8 as revenues dropped by 40% yoy in the first quarter. This is a business that used to generate over $320M in annual revenues pre-COVID, growing 10%+ yoy, and is now valued at less than a billion.
Another great company in the space is the wedding planning and registry player Zola. It was announced this week that it would be laying off 20% of its staff, cutting salaries across the board, and transitioning the majority of its employees to a four-day work week...
And the outlook is grim. These are businesses that do best with live events and large crowds. While online events generate revenue (Eventbrite highlighted that it processed 19 times as many tickets for online events vs. a year earlier), they are still minuscule.
As a result, there are lots of opportunities for digital event innovation. Artists desperately need the tools to run online events of all sizes and event organizers need software to replicate their offerings online.
What were the major tech trends? And will they last?
There aren't many surprises on the consumer front at first sight, but let's take a more in-depth look. I came across this research on Australian consumers and the most significant impact on their consumption habits.
On the enterprise side, there are no big surprises either.
The biggest winners are digital health, remote learning for kids, work from home and collaboration software, e-commerce, online fitness, grocery delivery, and wellness apps.
Restaurant-food delivery did not see much user growth. This is bad news for restaurants that need online delivery more than ever. On top, these online platforms are squeezing restaurants more and more by commanding high margins without improving the restaurant's productivity. In essence, the question is: where is the Shopify of the restaurant industry?
While video has been a lifesaver, not everyone is convinced that this will be a permanent shit... As Ben puts it, video conferencing tools such as Zoom have done a good job of asking why it was hard to get into a video call and removed much friction from the onboarding. But they haven’t really asked why you’re on a specific video platform in the first place. In the 'new normal' where we can meet up again in person, the lack of lock-in effects of the various platforms might become a challenge. Let's see if they can keep the land gained these last months or if voice calls come with full force. I mean why, exactly, are you sending someone a video stream and watching another one...?
Online content streaming is here to stay, as expected. But, beyond the rise of Netflix subscribers, this category has seen new formats rapidly becoming mainstream in just a couple of months. One example is the new audio entertainment players such as our company Sybel that allows people to be entertained in a new and unique screenless and social way.
Was that your mom I saw on Tiktok?!
If you look a bit closer, you see one category that is, in fact, not a category, but a company, TikTok. This mobile app might be the biggest winner of them all. This new entertainment format is everywhere, and downloads have skyrocketed in the first quarter.
TikTok has essentially become the best way to create and consume short videos on mobile. Based on fantastic execution, it rode the wave of AirPods and audio memes to over 1 billion DAU’s to become one of the world's most valuable tech companies.
Let's build a brighter future...
As we are living in our 'new normal', the opportunities to create impactful and long-lasting digital products seem more abundant than ever. We need to find solutions, and quickly, to entertain people in a healthy way, bring events safely back to life, help artists make a living, make restaurants thrive again, and much more. So, if you have a groundbreaking insight, do reach out to me.
Life is awesome,
Other content I have found useful:
- Huge congrats to my friends Sara and Esteban for the launch of Recast Capital, the platform to support and invest in emerging managers in venture.
- A brilliant overview of remote work software players by Elaine. This is the most detailed analysis I have come across. Check it out if you are interested in the space.
- Massive congrats also to Rodrigo for heading Amazon's new $2 Billion Climate Pledge Fund to invest in products to protect the planet. I can't wait to see the impact he and his team will have.
- More #B2CSaaS news: Mobile insurance company Lemonade just enjoyed the year's strongest IPO debut of a U.S. company as shares soared on their first day of trading today. Launched only 4 years ago, the company's trajectory from launch to IPO was SUPER fast. Here an in-depth S-1 analysis.
- The most complete list of European visas for tech founders and employees by Gonz. If you are looking to start or join a company in Europe, this is a must-read.
- Here a great list by Pedro of international VC firms investing actively in Portuguese startups. I enjoy visiting Portugal a lot and am very bullish on the fantastic local talent and tech ecosystem. So, Portuguese entrepreneurs, do reach out to me on this blog.
- America rediscovers the joys of vegetable-growing by the Economist. People are searching for gardening more than ever on. Here the Google search trends:
- 18 big announcement on Apple's WWDC 2020. Oh yeah, I can't wait to use AirPods that are FINALLY able to seamlessly switch devices and that have spatial audio.