#9A – Impact of COVID-19 in the World, Venture Capital and Start-ups

We split this episode into two parts: in this, the first part (9A), we discuss the broad implications of COVID-19, the short-term and long-term implications, how this is the “end of the world, as we know it”, but why there are many reasons to be hopeful about the future to come (recorded on April 16th).  Look out for the second part of this episode (9B), where we will be focusing on the impact of COVID-19 in the Venture Capital and Start-up ecosystems. Navigation: Introduction (01:27) Section 1 - COVID-19 - “the end of the world, as we know it” (02:36) Section 2 - What the future holds (05:53) Section 3 - Economic impact (12:03) Section 4 - Long term impact of COVID-19 (18:41) Our co-hosts: Bertrand Schmitt, Tech Entrepreneur, co-founder and Chairman at App Annie, @bschmitt Nuno Goncalves Pedro, Investor, co-Founder and Managing Partner of Strive Capital, @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 Full transcription: may contain unintentionally confusing, inaccurate and/or amusing transcription errors Intro (01:24) Nuno: In today's episode, we will be discussing the impact of COVID-19 and the pandemic. Specifically, we will go through an introduction. We are recording this on April 16th so the numbers that we have today, we will also talk about what the future holds. We will be sharing the opinions of several people that we've been reading as well as our own opinions. We will be discussing the core assumptions economically and how the world is supposed to recover from this. We will discuss the longterm impact of COVID-19 in our own view, and how do we expect to be exiting this pandemic? We will talk about the impact to venture capital firms in their own fundraising, in their own operations. We will discuss the impact on startups, how and where they play, their markets, their operating models, the complexities that they're going through. And finally, we will finish with the impact on board of directors and governance in these companies. We will, be splitting this episode into two so that it is more digestible. We will not be talking about the scientific ramifications of COVID-19, we are not experts in that space and therefore we will stay away from those discussions.  Bertrand a difficult start to this episode, it is the end of the world as we know it. The REM song is a little bit happier than this, but in some ways it is the end of the world as we know it. Bertrand: But it is not the end of the world.  Hopefully, we are going  to grow back. It's definitely tough times. As of today, we have more than 2 million cases, confirmed. Close to 150,000 dead. It's really, really, big numbers. It's amazing the change in society that have happened over the past few weeks, few months, since early January, since it was starting from Wuhan in China. Expanded to China, and then expanded step by step to the rest of the world. We saw Europe, we saw US, and many other countries are going to get even more impacted from South America to Africa. It's an event like you have every 50 or 100 years. So, it's a very, specific moment in time and, a surprising timing for us launching our podcast. Nuno? Nuno: It's been an interesting, and by interesting, obviously we can't really minimize the tragedy of what is going on. The stress that is basically affecting all our infrastructure hospitals, food supplies, the effect that we're having in our own lives as people are locked down, they're sheltered in place. So in this episode, although we will talk about a lot of things that we hope to be hopeful about and more positive about, we did want to start  in this more somber note of acknowledging all the deaths and all the people that have been affected dramatically by the virus already, and those that still will be affected by it. So today, everything that we will share with you is our own opinions as best informed as they are at this point in time. Bertrand: Hopefully having both lived and worked across US, Europe and Asia, having lived in China many years, we have some level of global perspective on all of this. Myself, I've been following quite closely the situation since late January, since the quarantine was official  in China.  And it gives us some perspective on where do you go next, and specifically, Asian countries went through that first,  not just through COVID-19, by the way, but through other episodes from SARS,  to MERS, to different type of epidemic in the past. So, in many ways, they were also the most prepared for this type of situation. Nuno: And in some ways we've been blessed. We have people that are very good friends, even in some cases, family members, that are based in Asia, that have gone through this as the first blunt, hit China, and we've gotten a lot of feedback. Both of us have been very conservative in how we've approached mobility in the time of COVID. We both went into shelter in place, pretty early on, actually, even before Northern California, started shelter in place. We had an interesting exchange  of devices and equipment to record the podcast at a distance already. And so I think for us, people that have connections to other parts of the world , we have treated the situation with the due respect that it deserved. And we've been both been in very strong shelter in place now for over four weeks. Bertrand: Yes, definitely, I think we were probably more prepared than most. It's not just our global perspective, perspective of China, but also the fact that  we understand numbers, or at least, we try to understand numbers. And definitely, there was a lot to be scared from the numbers coming from COVID-19.  Section 2 - What the future holds (02:36) So,  it's time to go into our section around what's going on, what's going to happen on the very short term in term of shelter in place, how long will it stay there, how is life going to change around the coming few weeks or months. Again, we don't have a crystal ball, but we will try to share some informed perspective based on what we have learned over the past few weeks, especially from other countries, and the the latest from the news. Nuno: I think the level of preparedness that we have seen work, does command a very strong discipline around a few dimensions and we can go into them. One is the dimension around testing that testing is readily available because  if we can't test people either for antibodies or if they're infected, it's very difficult to know who's out there that's already infecting other people. So the ability to let people out of shelter in place depends very strongly on the testing infrastructure available to have tests and other mechanisms to make that work. So that is clearly something that we would be looking at in the case of the countries that are still in shelter in place or in lock down equivalents. Bertrand: Yes, as you say what we have learned from Asian countries is definitely that  you have to do a lot of tests , you have to be able to track and trace, what has been happening, people who got infected. So, there is a lot of tools that have been already discussed, in some case vetted. We have just seen actually,  recently Google and Apple, working together to build better apps, to help track, who you met through your smart phone using Bluetooth connections. I think there has been quite a few weeks where it was not really clear where we were going. But it's starting to be more and more clear what would be the criteria to reopen states and countries. And not just by looking at what Asian countries have done, but by listening to what our governments are telling us right now across Europe or in the US. We just have actually today, President Trump talking about opening up America again,  sharing guidance of what states should we looking at, when they decide to reopen. What different level of opening you could do: a phase one, a phase two, a phase three. And we have seen similar things in France, in Europe. With many countries trying to put a date around, sometimes in May, sometimes in June. I think no one is really sure. Governments who give you precise dates are probably,  either wrong or trying to just share their best estimate. I think what is key is understand this criterias and what it means. And therefore, you would get a better understanding of: will this state potentially change, get delayed. And that will help you make the right business decision. I think another piece that is quite key is to understand what means reopening, leaving a shelter in place. It doesn't mean we go from black to white, in a minute. It will be a gradual release. And if things go wrong, and I'm sure they will go wrong in some states and countries, there will be some level of rollback to some previous measures. And that will be some things to be very careful in term of our understanding of where we might end up because all of these parameters might change, might be readjusted. And might depend  on decisions by state, by countries. All will have their own approach to manage this. And some might be doing it really well, some  might have some more issues. Some might try to favor a lot more personal freedoms, some might not care as much about that. So, there will be different roadmaps by different countries. And we need to acknowledge that. And maybe a last point is that, obviously, what's going to give us our full freedom back again is getting access to either extremely good treatment that limit the level of pain and death we get from that virus, and ultimately having a good vaccine. I think it's pretty clear for everyone following this, that's really the criteria  to going back to true normal. What we are going to experience in a few weeks will be a new nor