Back in the early 2000s, just as the internet was gaining traction, the world’s foremost futurists were talking of a ‘new economy’; a ‘structural shift’ that would change the way we live forever.
It was a statement that all but the most forward looking and technically minded individuals poopooed. But as Covid-19 wreaks havoc around the globe have we once again reached the precipice of another societal-defining moment?
Seismic as the initial health response (and subsequent ‘lockdown’) has been, the economic impact will be of a magnitude much greater and not simply because it will cause a deep recession. The pandemic will cut swathes through many of the industries we take for granted, and many businesses within them will never return.
Suddenly a business’ cash position is critical after years of running on debt and fumes and as Warren Buffet so eloquently once put it:
“when the tide goes out you see how many were swimming naked.”
The end of the 20th century economy?
For those that survive thoughts will soon switch to how to better protect themselves, and their employees, from future outbreaks reducing reliance on human workforces and global supply chains.
Yes, there will be a financial crisis but, longer term, we will look back and see that Covid ushered in a new era that kickstarted the end of the 20th century economy as we know it.
Such changes are critical to how a start-up investment fund like ours functions of course and we have spent the last two weeks beginning to build out our view of how this could shape our own investment thinking.
As a backer of digital disruptors and pioneers we are in the somewhat privileged position of seeing what some of the most forward-thinking entrepreneurs on the planet are working on and how they see it changing how we work and live.
So, what changes?
The biggest thing we will see from the shift is an acceleration of the inevitable. Before all this we knew that robots would be important. We knew that the High Street, as we know it at least, was dying. We could see how virtual reality, online gaming and video would change the way we worked and spent our leisure time.
In many respects the growth in all of the above will come as no surprise, but it will fast become a priority of those that run businesses to install autonomy wherever possible to find ways to mitigating further outbreaks and even look to enhancing health cover as a critical employee benefit to attract the best workers.
Covid 19 will also sweep away many of the artificial barriers to moving more of our lives online. Not everything can become virtual, of course. But in many areas of our lives, uptake on genuinely useful online tools has been slowed by powerful legacy players and bureaucracy. Both the former and latter will evaporate away as barriers and red tape fall, creating a gold rush for anything that digitises our lives.
And that will cut across everything from how we educate our children to how we socialise and interact with one another. In a world where there is a sudden awareness that touching and coming into close contact with anything or anyone carries inherent risk will will switch from asking, “Is there a reason to do this online?” to, “Is there any good reason to do this in person?
Home schooling and remote working
Home schooling will also become more prevalent in parallel with the obvious changes in remote working that will follow. Parents are realising they can work more effectively whist helping their children grow at the same time; a powerful combination of factors that will produce an explosion in tools and platforms to make that more effective and efficient than ever.
Virtual and augmented reality will also come to the fore much faster than expected as a result of the changes discussed above. Less face-face interaction will mean we strive to make digital interaction more tangible, while it provides solutions for those having to self-isolate or withdraw from societal risk.
And with more ‘home’ time more and more will look to streaming; whether that be anything from consuming TV programmes or movies to gaming and beyond. Even sports will follow this route as we develop ways to make video more interactive and lifelike.
Supply chains and de-globalisation
And then there is the global economy; until now so interconnected and focused on just-in-time delivery and efficiencies that no one stopped to think about. How do we react? Should we look to become closer or further apart?
Whatever happens no country or industry will be blind to the risks that globalisation presents and that will drive behaviours towards greater production of good and food domestically, creating an expansion of UK manufacturing and agriculture, after so many decades in the doldrums but with a new focus on how technology can help. Buying British will never have had such kudos!
There will be oodles of opportunity for those thinking about how they can provide key products to businesses small and large that have, until now, relied on other countries to provide them. While costs may increase, some will see the trade off as both necessary and worthwhile.
And what then happens to our view of the physical environment once we are allowed out again? If, like me, you’re already suddenly aware of touching handles, letter boxes and packages how will you feel when we go back to ‘normality’? Start-ups and companies building out the future of hand-free hardware and tech will prosper like never before. After all, why would you want to touch a lift button or door handle when you can gesture to open or operate it?
And the same goes for cash. In the same way we saw this coming for the High Street and other areas of the world within which we live the same will undoubtedly be true of cash; its use already in serious decline. Money that was already pouring into contactless payments and so this will only increase to make this theory reality.
And if you are wondering is any of these predictions have legs then consider this simple data point; one of the few already available that gives us any kind of feel for how rapid this acceleration could be:
“In just the last five months online ad spend has increased to what it was projected to be in 2023 because so many more people are spending so much more time online.”
This is a huge break with the past.
Pandemics throughout history have always left a legacy. This is Covid 19’s and it will shape how we live and work, forever.
For more on how best to navigate the current crisis please take a look at our tips for managing the day-to-day challenges that Covid-19 brings.