Never Let a Good Crisis Go to Waste: Startup and Venture Opportunities in a Post-Covid World

July 2020

The impact of COVID is, of course, devastating; at this writing, more than 140 thousand deaths in the US and nearly 600 thousand worldwide. Reports of new cases are raging, largely in the US and in developing countries. We face the threat of another wave of overcrowded hospitals, overworked and traumatized medical professionals and other first responders, shutdowns, quarantines, infections, deaths, and the social and economic impact of all of those. 

At the same time, crisis catalyzes innovation. Beyond the obvious medical innovation – the race to improve treatment, reduce mortality, and develop a vaccine -- enterprising entrepreneurs are finding ways to solve the unique challenges introduced by COVID and its effects, solving short- and long-term problems, creating products and services, and affording investors the opportunity to support them. 

Below, I’ll outline a few themes – beyond the obvious COVID treatment and vaccination -- that we are seeing and should anticipate in investment opportunities, and that innovators and investors might consider as places where technology, ingenuity, and the ability to solve new problems merge to create opportunity. 

The most obvious non-medical impact of the current crisis relates to location shifting. Everything – work, play, dining, education, and entertainment – is coming back into the house. An obvious beneficiary of this is Zoom (NASDAQ: ZM), which closed at $68.72 on January 2. On June 30 it was trading about $250 per share – an increase of over 250% in six months. What other types of businesses could capitalize upon this crisis-motivated trend?

Work from home: Screamingly obvious, but we’re only in the second or third inning of this trend, and the tools are still pretty crude. With more people working from home for longer, there will be opportunities to dramatically improve that experience.

·     Video meetings 2.0 and beyond: Zoom, Facebook, Microsoft, WebEx, and Google – or ambitious new entrants -- will all introduce dramatic improvements to their video meeting tools – tools that will allow attendees more flexibility to do things in video meetings that they did in regular meetings. Sidebar conversations, video flip charts…and someone, somewhere will design a technology that will eliminate the need to say “you’re on mute.” 

·     Comfortable and stylish home offices: Look for a range of workstations, chairs, storage, lighting, headsets, mics, and other accessories that are attractive, functional, and specifically designed for home use. Especially that home office chair, improvements to which will be a disappointment to chiropractors everywhere.

Entertainment and Experiences: Boxing, MMA, and other sporting events have operated on a pay-per-view model for years if not decades. Peloton has moved the spin class into the home and made workouts interactive, competitive, and fun (at least some of us find them fun…others, not so much?). As we move into a new normal, people will still want to be entertained, and entertainers will still need to generate revenue. 

·     Home entertainment 2.0: Look for businesses developing innovative ways to bring sports, music, theater, and other forms of entertainment into the home, and to do so in ways that transcend just sitting in front of a screen. We’re still in the early stages of interactive entertainment; it’s safe to assume that with more happening in the home and a desire for control, viewers will become participants – certainly gaming, and perhaps gambling, voting, and even choosing songs at concerts and endings for shows and movies in real time.

·     The experience economy:  The mass-affluent market has added the desire for unique experiences to its desire for things. With adventure travel and other unique experiences (sitting next to a theater icon at a benefit dinner, having a private meal with a world-class chef, wine tastings with vineyard owners, private tours of difficult to access attractions) unavailable in the traditional sense, opportunities will arise for entrepreneurs to bring those experiences into the home.

·     Events made easy: Anniversary? First date? Birthday party? You might not be able to hit your favorite restaurant right now, and even if you can, you might not feel safe doing so. Just ordering take-out doesn’t quite cut it. Look for disruptive businesses that deliver high quality in-home events– beyond just dining – bringing memorable experiences to the consumer.  Think “party in a box,” delivered on short notice, with all of the food, drink, and accessories for a memorable event.

Learn from Home: Remote learning 1.0 began over a decade ago, and has been gradually refined, largely by institutions (public and private, academic and for-profit) looking for ways to scalably monetize their intellectual capital independent of location. Remote learning 2.0 was a fire-drill that began in March, 2020, and whose results were inconsistent at best. Remote learning 3.0 will begin in the fall, improving on 2.0 based on research and experience… and increasingly capitalizing upon tools developed specifically for remote and hybrid learning. 

Home service delivery: A broad range of services that households require can no longer be delivered in the traditional fashion. Homeowners will want to limit access to their houses. 

·     Remote professional services: You won’t want to meet in person with your lawyer, accountant, or insurance agent; they’ll need ways to interact (see Video Meetings 2.0 above) and review and execute documents remotely. 

·     Reimagining realtors: The experience of buying and selling houses, looking for apartments, and tours and inspections associated with them are all rife for technological disruption. 

·     Reusable upgrade-it-yourself appliances and devices: Home service and DIY repair should also catalyze an important trend in sustainability, away from use-and-toss and towards development of devices of all types – from major appliances to portable electronics – that can not only be repaired remotely or by the user to devices that can be upgraded. Bonus points when the “circular economy” comes into play, where users don’t discard obsolete or non-functioning parts, but return them to their manufacturer for upgrade, repair, reuse, or recycling. The genius bar and refrigerator repairman will both go virtual.

·     Payments and delivery: Businesses that enable touchless exchange of funds and that reduce or eliminate the need for contact in delivering goods will continue to flourish. Many of these systems are still crude and while they are theoretically “touchless” still require physical proximity that may make consumers nervous. 

Reinventing the place of business: There are still businesses that require a physical presence, and we will see gradual return to work, albeit with considerable changes. Look for innovation by businesses designed to enhance the safety and security of workspaces that require physical presence.

·     Security and access control: Is the person walking in to the building running a fever or showing other signs of illness? When was their last COVID test? Have they self-certified that they are healthy and haven’t been exposed. Satisfied their training and compliance requirements? If they fail, they’ll be denied access. Think thermometers at a distance, facial or other biometric recognition, touchless in-person questionnaires, and more draconian restrictions to building and facility access. 

·     Voice and motion recognition replace touchscreens and forms: We all know they’re filthy. Innovators will make them a thing of the past.  The touchscreen you use to order a meal, confirm a transaction, leave a tip, enter your email, check in to a restaurant, health clinic, or otherwise announce your presence will be replaced by touchless motion sensors, voice recognition, or linkage to your smart phone, the latter helping eliminate the dreary duplicative exercise of filling in your name, address, and other information myriad times.  

·     Cleaning and sterilization: Services and technologies that disinfect offices, warehouses, gyms, and other places in which there are people physically present will be in high demand. Many of these businesses are unsophisticated and not well-run today – so especially businesses that are labor-intensive be upgraded, made more professional, with enhanced training, better pay, and more consistent practices, improving employee attraction, retention, and consequently quality of service.

·     Anti-infection office equipment: The cubicle will not die as some people predict. Rather, it will be constructed differently and with better ventilation.  Office equipment will be redesigned and layouts rethought to manage the flow of traffic, air,  and, consequently, pathogens to improve worker safety. 

·     Flexible workspaces: There is a debate raging in the commercial real estate market about the extent to which there will be a need for more office space (physical distancing) or less (work from home). The latter will be the dominant trend. As a result, in-person workspace will need to be more flexible (think hoteling) with a need for technologies and equipment that support this trend.  Pre-COVID it was still hard to book a conference room – innovators will make the business of booking an office, connecting to networks and accessing files and printers, communicating between in- and out-of-office employees, and even accessing the physical workplace itself simpler and more reliable.

Personal protection equipment: PPE is becoming mainstream.   It’s obvious that innovation in medical and professional PPE will thrive. Look, though, for innovative and more attractive and functional PPE to hit the consumer market.  

·     PPE as fashion: As more businesses and even governments require face coverings, and as the trend extends as many believe it will, face coverings as fashion will become a trend, and coordination with one’s outfit will be as common as it is with other accessories for men and women. It may very well supplant the t-shirt, at least temporarily, as the status sign of having visited somewhere or accomplished something. Look for college and sports logos, bands, Broadway shows, museums, athletic accomplishments (think those “13.1” and “26.2” and “140.6” and “IM” logos), and of course “My family visited [fill in the blank] and all I got was this lousy face covering.” 

·     Infection resistant  membranes and barriers: For those venues where contact with equipment is critical, look for the development of bacteria- and virus-resistant materials and membranes and coatings for workout equipment and other surfaces that are often frequently touched (and can’t be made touchless). 

Ratings and Evaluation: Finally, look for innovation in the rating and evaluation of the practices of businesses and venues based on their safety. This may come through existing platforms (e.g., Yelp), but may also be developed independently and be candidates for acquisition. As a side note, this is also an opportunity for entrepreneurs to develop rating systems for how businesses handle social justice, sustainability, employee-friendly practices, and other ESG practices; topics I’ll discuss in another issue.

Even if a COVID vaccine is developed, approved, manufactured, and broadly distributed and administered, fear of this virus, other existing viruses (influenza), mutations, and new pandemics will lurk for some time. Crisis will engender creativity which will help address these issues while creating viable products and services… and wealth.

In closing, I offer the thoughts of Nobel Prize willing Hungarian biochemist Albert Szent-Gyorgi who conducted groundbreaking research, isolating vitamin C, studying the citric acid reaction cycle, and applying quantum mechanics to the study of cancer. He observed that “innovation is seeing what everybody has seen and thinking what nobody has thought.”

The good ideas all look obvious in retrospect.

“Blinding Flashes of the Obvious” is a series of articles and posts providing observations and insights on a variety of topics that impact startups, impact investing, sustainability, and ESG.

Stephen Ban is CEO and Founder of GreenCat Advisors, LLC, a strategic, management, and marketing consultancy to mission-driven organizations including businesses focused on corporate social responsibility, ESG strategy and messaging; social enterprises; and not-for-profits.