I am referring to virus in two contexts. First, related to the coronavirus and its implications for entrepreneurs. Second, a virus as something that spreads and takes off, i.e. an emerging trend. The corona virus will be creating its own treatment industry. But it is also having profound implications on new and emerging industries, which is the focus of this note.
The single best time to start a new growth venture is after a new trend emerges and before it takes off. If you look at the history of unicorn-entrepreneurs over the last 70 years, you will find that this is the single most important timing factor behind the growth of new growth ventures.
The emergence of semiconductors launched a number of new giants, including Intel and AMD. The emergence of big-box stores launched Walmart and Best Buy. The emergence of personal computers launched Apple, Microsoft and Dell. Internet 1.0 launched Google and Yahoo. Internet 2.0 launched LinkedIn and Facebook. And on and on.
So what will the coronavirus do? Will it create a new trend? Many think this too shall pass. China seems to have brought the virus under control with “minimum” damage to its economy. Let’s hope that the other countries and the U.S. are able to do the same.
The virus is already changing consumer habits some of which may have a permanent impact. People forced now to try home delivery services may stick with it further spurring the growth of this service. This can help companies such as Amazon and its emerging delivery fleet.
The virus is also changing business habits, some permanently, spurring emerging industries. I am sure it will also start new ones and help to establish some industries that have already emerged.
We will not know much about the new ones that are starting until they have an impact. But the coronavirus is already having an impact that we can see and that will have a long-term effect on currently emerging industries. Internet 1.0 changed the way we made news but the impact on newspapers was not evident until years later. The Internet also changed retail but the impact on stores was not evident until years later. Similarly, the corona virus event is changing the world and the impact on existing companies and new ones will be evident in the long term.
The virus has already changed the education world, especially higher education and is creating new trends. Some universities, including Harvard, have cancelled classes and are sending students home. More classes are being shifted online. This is likely to be the spur that will change the balance between in-class education and online education. Not only will this impact the quality of education and the rate of improvement of the technology to teach online, but it will affect the micro-economy around universities, including housing and retail. It will also change the relative prestige of being a full-time student on campus and a student online. By removing the shackles of on campus space, universities can also expand to the limits of their potential or their prestige and destroy less prestigious universities.
The virus is changing medicine with companies such as Teladoc soaring in popularity. Once we start seeing physicians online, surgery will not be far behind. And then we can see a physician anywhere in the country – and the world. This can be the spur needed to make the cost of medicine more affordable.
The virus is changing travel and the convention industry for obvious reasons. In the long run, does this mean that we will reduce the need for onsite conventions? If meetings and conventions can be done online, why go somewhere? Will this change networking and sales? And who will benefit? And what will the hotel industry do with its massive investments in fixed assets?
Some other trends and changing industries, at least temporarily, include remote working and restaurants. More employees working from home has implications for transportation, real estate and oil. Amazon is already offering grants to restaurants affected by its decision to encourage more homework. And if parents are home, they may be able to reduce the need for child care, which may be a boon by reducing transfer of germs. What percent of those shifting to working from home will stay there?
Some of these changes will be temporary. Some will create permanent changes in habits and spur new technologies and new emerging industries. One set of fortunes will be destroyed. Another set will be created. The key is to see through the rubble to find your unicorn opportunity.
MY TAKE: Those who keep their heads when everyone is losing theirs will make fortunes. I wonder what Buffett is doing. He was severely criticized for hoarding cash. Obviously, he was right. What are you doing?