In his opinion column on the Financial Times titled “The business world can never go back to the way things were“, famed Sequoia partner Michael Moritz articulates what he believes are the winners and losers in the wake of the “New Normal” post Covid-19 lockdown.
Winners ?
(all conduct their business over the internet)
- Services to the home
- Cloud kitchens
- Remote work
- Grocery/ pharmacy deliveries
- Online exercise equipment
- Video streaming services
- Telemedicine
- Edtech
- Security
Losers ?
- Gyms, malls and restaurants ‘day of reckoning’
- Business travel and entertainment will be severely dented
- Lower demand for commercial office space
- Airlines and hotels will suffer for longer than anticipated
- Western consumer confidence
- Leaders who downplayed the crisis
The role of science in decision making
Clik here to view.
The last point Michael makes in the article is perhaps the most poignant:
“For business and political leaders Covid-19 conveys two other lessons. First, their organisations can move more quickly than they ever thought possible. Second, those who played down the warnings of the plague have now received a taste of what it will be like if they continue to ignore scientists’ warnings about a far greater scourge to humanity: climate change.”
Michael Moritz, FT
Sequoia’s Black Swan
Sequoia was one of the first venture capital firms to alert startups on the impact of Covid-19 calling it the Black Swan of 2020, and urged startups to make ‘fast adjustments’ to control spending until they can chart a course to financial independence:
- Manage cash runway – trim expenses
- Plan for longer fundraising cycles
- Adjust sales forecasts – even if no impact is immediately felt
- Raise the ROI for marketing spending
- Evaluate headcount and hiring in this period
Clik here to view.
Ending on a more positive note
It’s worth mentioning that even with this warning, Sequoia mentions that the “Many of the most iconic companies were forged and shaped during difficult times”. Following Sequoia’s 2008 RIP Good Times deck, shortly after the collapse of Lehman Brothers was one of the fund’s most active investment periods that forged Airbnb, Square, and Stripe in the midst of the financial crisis.