Memories of empty city streets will soon fade as we return to cities for their unique structural … [+]
In a world of extreme, polarized views and a competitive media environment that rewards clickbait rather than balanced opinion, it is easy to feel overwhelmed.
For all of us, what used to be simple decisions are now anything but. When can I go to the office? Should I travel overseas? Can I send my children back to school?
For entrepreneurs trying to plot a path for their company, this is the most challenging environment in living memory. The pandemic and resulting recession really are unprecedented in scale. And the situation continues to be extremely fluid.
As venture capitalists, we benefit from something of a helicopter view. We see thousands of companies each year before making decisions to invest in a handful. From this vantage point, we have seen a reasonable number of founders make, what we believe, are missteps in their strategic planning because of Covid-19.
These missteps are largely driven by commentators who profess to have a crystal ball. They hail the end of the office or the fall of the city to drive short term media attention. By the time their pronouncements are shown to be materially inaccurate, they have moved on to write about the next short-term trend. But the impact on their readers, saturated by opinions masquerading as facts, can be profound.
The attention-grabbing headlines tend to have some element of truth to them, but are invariably extreme. Let’s unpick the two examples about offices and cities.
Work is likely to be more flexible in the coming years. Forcing a large swathe of the global population to work from home has been a successful business continuity test. And many employees are keen to continue working from home to a certain extent.
But this does not mean the end of the office. It means a new, more nuanced relationship with it. Offices are wonderful places for collaboration (planned and serendipitous). Time spent together in the same place allows us to build social capital with our colleagues which is hard to do remotely. And the stimulation of a different working environment is supportive for our mental health and wellbeing.
In many ways, cities are much like offices. They are places where many people come together to forge new relationships, to seek new opportunities, to build dreams. The density of humanity in cities is a unique structural advantage. It is why young people all over the world seek out the ‘bright lights’, driving a macro trend of urbanization that will see 7 billion people living in urban areas by 2050. In the context of such a forceful trend, the impact of Covid-19 will not be material.
You may find yourself disagreeing with me. You may think the commentators are right and that the current approach to remote working and cities will persist. But consider a simple fact: humans are animals. We forget this sometimes in our self-delusion that we have risen above our instincts. But, in truth, we have needs and wants that have not disappeared because of stay-at-home orders.
Once we have a vaccine, effective treatment, or the virus is, for whatever reason, no longer a threat, there will be offices full of people and cities welcoming their latest arrivals to seek their fortune again. We are fundamentally social animals and for the majority our needs are not fully met behind a screen.
Set against this disorientating backdrop, it’s no surprise entrepreneurs feel knocked off balance and are tempted to take a more short-term view. In certain situations, this may be the only option, but for companies that are not forced to take immediate drastic measures, take a moment to ensure you are not falling into one of these traps.
Starting with the most obvious – do not build your entire business plan around Covid-19. We have seen many companies, in various sectors, that aim to solve the problem of people not being able to leave their homes. Once the stay-at-home orders are lifted, these business models quickly lose their validity. It also reflects poorly on the entrepreneur for being too short-term in their outlook.
For companies that have pivoted their business models to take advantage of the current conditions, this may be a good idea. But again, consider what happens when life returns to normal and the business no longer has a Covid-19 powered tailwind. A very quick ramp-up often ends with an even faster ramp down. Always have a Plan B and build an offering that will be in demand for the long-term. When you are under pressure, use your vision and your values (codified or not) as your guide.
Finally, think very carefully about the wording you use when you talk about your business in the context of Covid-19. Some sectors have been given a significant boost; many have not. Be sensitive to that and let us not forget that this is a humanitarian crisis costing hundreds of thousands of lives around the world.