#25 – The Bubble we are in and its implications – Part 1

Is this a bubble? If so, what type of bubble? Where are we heading? We share our views on where the economy is going, the importance and effect of COVID, several key opinions on both sides of the spectrum and land on whether the current situation is sustainable or not. Navigation: Introduction (01:33) Section 1: The COVID effect (02:43) Section 2: The economy...stupid? (11:08) Conclusion (43:33) Our co-hosts: Bertrand Schmitt, Tech Entrepreneur, business angel, advisor to startups and VC funds, co-founder at App Annie, @bschmitt Nuno Goncalves Pedro, Investor, Managing Partner, Founder at Chamaeleon, @ngpedro Our show:   Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news Subscribe To Our Podcast Intro (01:34) Bertrand: Welcome to Tech Deciphered Episode 25. So this episode 25 is part of a 2-serie episodes: episode 25 and 26 that will be around the current bubble. We believe that at this stage from a big macro perspective there are a lot of questions around where's the economy going, and this would be the topic of episode 25, that big picture perspective on where is the economy going? Of course, all of this being impacted big time by COVID. We'll talk a bit about that. We'll talk about inflation, prices where all of this is going from a macro perspective. In episode 26 we will talk more about, in more details, what does it mean for entrepreneurs, tech entrepreneurs, tech industry, VCs, where the VC landscape going, where are exits going, and what does it mean for me as an entrepreneur or me as a VC? Nuno: And today we start with, where is the economy heading, all the macro conditions that are happening in the market and their implications. Bertrand? Section 1 - COVID effect 
(02:43) Bertrand: We have to start with COVID it has so much impact, not just on our lives, but on the state of the economy, on some big decision on the financial market side, on additional government interventions, or not. So I would say it's a very mixed picture. I think I had a sense of optimism that day to day life was going in the right direction just maybe a month ago, even if I was, and we were being both realistic as we discussed in some previous episodes. Back to normal, like international travels and the like, as we used to do on a regular basis might just be for some time next year, maybe summer next year. I guess there are some serious concern that our basic everyday life might be back to some sort of war footings. In where I live in Seattle area, King county, we are back to mask mandates indoor. It's not yet forced, but I guess it will be there soon. It's highly recommended we all heard about the CDC recent news also advising for masks mandates indoors for everyone. Vaccinated or not. It seems it's both because we cannot trust people who are not wearing their masks, that they have been vaccinated and because now there is also the risk that even if are vaccinated with delta, you might harbor the virus and share it with others. And I guess, in your region in the bay, it's also back to mask mandates. This time it's mandatory actually indoor. Nuno: From what I just saw. And, basically I got information from a club that I'm actually a member of that everyone now in San Francisco should wear a mask indoor, irrespective of being vaccinated or not. My understanding it's going to be mandatory at least for a period of time, but I'm not fully sure. Certainly there is a step back. From what was promising to be very nice summer for everyone. If you're vaccinated, you don't need to wear anything, et cetera, et cetera. In some ways, leaving this to the criteria of people wasn't a wise idea in the first place, because how do I know that someone's vaccinated or not? We saw a little bit of reverse engineering later on. There were bars and San Francisco clubs, there was a bunch of different stakeholders that started basically enforcing this notion of you have to share with us that you've been vaccinated or not either through your digital card for California. Forget the name exactly of it. Or just a copy of your vaccination card and digital format or a negative test. We already saw some news around that in the last few weeks, but in some ways I feel there now is going to be a more aggressive stance on this. The Delta variant is upon us and in some ways we sort of got it right, Bertrand, right? A couple of episodes ago, we talked about this isn't going to be until next year, 2022. Despite getting it right as we probably both became a little bit more optimistic about the conditions around us and probably also ease some of our guards in how we behaved. Bertrand: Yeah, and it feels like for a grand two weeks, I started to stop wearing masks indoor initially taking my time. And then as soon as I saw the rise in not just delta variant, but the fact that the that Delta variant might be more risky. Then I started before there was this news of new mandate, that I felt that the right thing was to actually start wearing a mask again indoor. I also noticed other people doing it by themselves. And of course we have to talk about Europe, I think in some ways Europe was, at least continental Europe, was a pioneer of starting to mandate showing your vaccine or a proof of recent test for a lot of activities and France actually was one of the pioneer to force that big time, basically saying, you know what vaccinated people are doing all the right things, we need to make their life easier, not worse because of the others. And I think that in some perspective it felt like it was actually the right thing to do. That you have to force a lot of inconvenience on people who are not vaccinated so that they become vaccinated in order to make us all safe. And that was the result, I think, in France there was 14 million registration in two weeks after that, a 1.5 million in just a few hours. So it had a huge impact. Israel maybe might have been doing that, some other Southern Europe countries. And I have the impression it's coming to the US a bit more indirectly. More like employers in a way are starting to force vaccination. So we saw some employers forcing it. I believe Walmart is forcing it, the federal government intends to force it, or force you to do a lot of testing. So I think that it's also coming to the US in one way or another. It might not be exactly the European standard, but it feels like it's coming and personally, I feel it's the right thing to do. But I must say that I start to feel, this is way more, how can I say, way more difficult to predict where it's going next. And that's my bigger worry. I think that we are going to go through the current delta virus. We are going to get more people vaccinated all over the place because people have no choice keep to keep living a good life or just go to their office and keep their work. But I'm not sure it will be enough. I'm seeing more and more articles that are, I'm not sure they are pessimistic, but I think they might be more realistic that we don't know where this is going. The last big pandemics were flu virus, they were not SARS, at least not at scale. And realistically we don't know where it's going and you have a chance that as we see with Delta, for instance, that: yes, you are more resistant, yes, you don't die thanks to the vaccine, but now it looks like you might still get infected, you might still infect others way more than expected. It might get worse with a new variant and you might have a new variant where your vaccine is not enough at all to protect you against a severe disease. Or, worse, you might have new variants where young people, kids, become more at risk. It feels actually realistically there might be a lot more uncertainties in front of us in the coming months, if not years actually and on the good side, the good news thanks to the new mRNA approach for vaccines like Pfizer, like Madonna. we can create very quickly new vaccines, very fast based on the latest variant. So on the positive side, if the virus evolves quickly, we may be able to make vaccines even faster. And hopefully now we have the capacity to distribute even faster, but. it feels like it might be a long game of hide and seek, whack-a-mole type of approach for potentially years to come. And I start to think we will have to live with it, with this level of uncertainty for quite a while. And some people say, oh, that's okay. You just get used to it or you're vaccinated. So it's less dangerous. I don't know. In six months we might have a variant that is as dangerous as the first one when you were not vaccinated. Nuno: This is a complex system. And in some ways we've been, over-simplifying all along the analysis. And by we, the world, not us too, but the world it's oh, it's very simple, and we have these tiers and we move counties and cities and countries back and forth and openness and closeness. And we're now realizing the system is actually super mega complex. The variants make it extremely complex. We don't know what's next. Then after the Delta variant, I'm sure there will be others. We now obviously start to understand that obviously the effectiveness of vaccines is different. The Astra Zeneca vaccine, the SINOVAC vaccine doesn't have the same efficiency, the same effectiveness in some ways and efficiency of the Pfizers and Modernas, et cetera. We are running into a very complex system. I think the mandates now in vaccines, that we're starting to see all over the world. As you mentioned, also in the US also in government, not just private sector is pushing people to really behave in a more concerted way. But maybe we are right. Maybe it's going to be next year. And I hope at this stage, given that we've started having some bad signals that we are right that next year, is it,...