Trends in and beyond the COVID world

It’s not surprising that in a crisis we review and refocus on the essentials in life falling back to the Maslow’s hierarchy of needs — food, water, shelter, health (and we may add entertainment).

The speed at which the COVID-19 crisis hit the world and business took many by surprise, but what has been different about this crisis over others in past history is that this crisis is taking place in the midst of the digital revolution.

This crisis has not delayed that revolution but served to accelerate it into all facets of life.

There have been numerous articles written on the global response to COVID-19, which simply would not have been viable 20 or 30 years ago. Right now, our ability to do the following is our strongest weapon to manage and defeat a crisis:

1. Share data and collaborate
2. Utilise knowledge of complex biological systems
3. Create apps which can be shared to a global population
4. Fast track development and scale technology systems

In 2007, we saw the birth of cloud computing and big data. What followed from that included smart phones, apps, new products and gadgets that connect us to the cloud, software eating everything (software as a service), a revolution of consumerism with new products and services being demanded from the Cloud (think Netflix, Deliveroo) and a new sharing economy (think Uber) that spurred on entrepreneurs and continues to do so. There was also a total change in the way we communicated socially — certainly for the millennial generation and other earlier adopters.

Now in 2020, in literally the space of weeks, the digital revolution has grown up with mass adoption and a complete digital transformation of the economy as we know it. It’s not likely to go back.

Human nature has some pattern learning and we tend to adopt strategies that benefit us into the future. Here are some trends and strategies I have noticed adopted during the Covid-19 pandemic, and where I see these heading in the future:

1. Social isolation and the discovery that we can work from home and maintain productivity (yet keep flexibility and reduce the daily commute) has seen work-life re-balanced. The commute has been replaced by time for family, community and a renewed focus on maintaining our health.
2. Tech adoption has been rapid. We now prefer cashless payments and are adopting these new technologies. Some have discovered e-commerce for the first time — with shops closed they search for their favourite brands and products online. We have discovered virtual experiences and communications — my daughter is building an online world with her friends, we have moved to remote work and learning, and our on-demand deliveries have increased.
3. The mindset however is changing, we are now cautious consumers and we’ve cut discretionary spend to increase savings. With many losing jobs, there has been a refocus on planning beyond month to month living.
4. There are also some new trends that will need political legislation and entrepreneurial intervention to circumvent: an accelerated rise in inequality with automation and efficiencies from digital transformations in organisations; government incursion into regulations and surveillance — a trade-off for our health security; and our future need for virus-free credentials to enable us to travel, attend events or enter the future workplace. But I’m hopeful that overall the change will be positive for the future. Perhaps we will see ESG principles already gaining traction pre-COVID19 forming a new foundation for shareholder capitalism where we care about not just profit but people and the planet — a more holistic view of our stakeholders. Can we leave the world a better place?
5. Our businesses will reprioritise to become more resilient — faster digital transformation to create efficiency, increased IT spend for cloud services, improving liquidity and diversified supply chains and a new focus on security and cyber with our business lives now living in the cloud. Distributed and remote workforces will potentially become more of a norm and companies will rethink the costs of their physical infrastructure for the lower cost of a remote workforce. The impacts on commercial property are yet to be seen but a once fully leased CBD will certainly change post-COVID.
6. One of the pleasing outcomes of this crisis has been finally seeing both sides of government working in bipartisan support for the good of the people, even when we were being asked to do things that were in our best interests but not popular. We expect our governments to make hard calls for us — that is why we elect them in the first place — to rule not by the popular vote but the best interests of the greater country.
7. Clearly post-COVID we will all be dealing with the aftermath, and I expect debt and deficit correction to be at the forefront of government (and this will mean increasing taxes). I’m hopeful that this will propel the government in a bipartisan way to have the political will to increase the GST as a fairer way to repair the budget deficit. I’m sure we will see increased regulation with impacts on OH&S and a view to protect domestic industry. Let’s hope this can be done without stifling foreign investment so important to our future growth, notwithstanding our need to reassess what is critical to sovereign infrastructure such as food security, healthcare and energy.
8. There will be a large displaced workforce and indeed some business may never return. We will need to be matching and mapping an individual’s skills to new economy jobs and reskilling the economy. Indeed, we see the on-demand job sector offering new options to displaced workforces globally. Cloud-based companies that can provide full service for companies managing global remote workforces will have opportunities. Our higher education institutions will also need to rethink their international strategy with education online becoming mainstream across the globe. Access, affordability and quality will change for the better. I believe this will lead to a contraction and consolidation as the drive to provide Harvard-like education more cost effectively to the masses becomes a COVID-19 reality. What will Australia’s USP be in providing and servicing our offshore education market — perhaps fast-tracked VISA entrance post study for certain categories? There is no doubt that universities are looking at more remote learning for local students to cut infrastructure costs. The digital experiment has shown this can work.
9. The nature of work and jobs will continue to evolve post-COVID and we don’t see many changes to our investment thesis. We look at companies that support or improve communications, remote work, business connectivity, sharing and collaboration or support business efficiencies will continue to grow in value. Take some of our own companies like Employment Hero (HR Cloud) and Phocas (Business Insights — making data easy). There are also companies that fulfil or provide technologies into the on-demand market and for online marketplaces, which will continue to grow. Our portfolio companies like Shippit (e-commerce logistics) play well into this thematic.
10. Healthcare will continue to be a dominant factor. We’ve seen the rise in telehealth, connected devices and AI for diagnostics and triaging of patients, and connectivity of data pools. The advances we see here won’t slow as we try to work out how economies can provide universal healthcare. People will look to their governments to support this so technology and healthcare convergence will continue to allow us to provide cost efficiencies and improved levels of care. New therapies and cures for disease will continue to seek investment as global health budgets double from their current 5% to 10% of GDP.
11. New technologies that can cost effectively grow fresh produce in limited spaces (or produce food more efficiently) will continue to get focus from national investment programs. While Australia has benefited from its large landmass and produces significantly more food than it consumes with 70% going to export, our Asian neighbours dealing with massive population growth need to find ways to access local fresh produce.
12. A world moving to social distancing will accelerate the age of the machines and artificial intelligence. Already we’ve seen robots supporting the lonely health-checking stations and machines taking over human repetitive tasks from fruit picking to food services to drone deliveries of goods. Huge investments globally are being made into the autonomous world. Waymo (the alphabet subsidiary) received a $2.2B investment for its autonomous driving programs. After all, does the world of the future see people back on mass public transport or more individualised remote carriages?
13. More players in the fight for access to our online and digital content viewing hours. I mentioned a possible addition to Maslow’s hierarchy of needs — entertainment. I took this idea from Mary Meeker whose excellence in examining and synthesising global trends has been a must read of mine for many years. Having served on the board of a major broadcast network in the last decade, I saw the tsunami heading to that industry and which has well and truly hit. It felt like trying to turn the titanic. The average home now has more than one streaming service — my own household has four, not including the mainstream broadcasters who all now provide on demand and streaming of major channels. QitUp, creating the next wave of short form content (designed for the short attention millennial), just raised $750k. E-sports and e-gaming, along with streaming to replace live attendance, will normalise and there will be many other new challengers seeking access to our viewing hours, and propensity to stay-in more for entertainment to access our favourite live events where governments limit attendance. Perhaps we will see more appointment viewing with friends as we live stream our favourite theatre company plays, orchestras, concerts, dance companies and our arts industry will learn to go global.

We will come through the crisis, but the world won’t be the same.

I’m hoping the different will be overall a good different. Different is good.

But different is hard. Believe me, I know. I look forward to the new wave of entrepreneurs that work out how to migrate us through this next decade. “The people who are crazy enough to think they can change the world are the ones who do.”

To conclude I reflect on Steve Jobs and his famous inspirational quote:

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.