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Coronavirus: A Crysis That May Help To Grow

18 Mar 2020

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Major conferences are getting canceled. Airlines are grounding their flights. Startups and studios are postponing product and film launches. Global stock markets keep plummeting. As COVID-19 keeps disrupting multiple industries, like travel, hotels, transport, and entertainment, market-watchers are talking about signs of another recession.

Both seasoned and young entrepreneurs are asking themselves looming questions: How can I protect my business during this havoc? What can I do to stay afloat?

As recently as last autumn, small business leaders were optimistic about their future. In September 2019, the Small Business Index showed that a majority of respondents said both their business and local economy were in good health.

Amidst the coronavirus outbreak, most companies’ value is crumbling – demand is decreasing and sellers struggle to survive as their supply chains are broken and cash flow is suspended. However, as always, not everything is so bad. Recent market research found several companies have actually been thriving during this global 2020 crisis, including video-conferencing software Zoom, file-management software Atlassian, exercise bike-maker Peloton, and remote healthcare company Teladoc.

The study’s authors concluded that those companies comprise a “Work from Home” portfolio. Basically, there are two major takeaways from this research.

Recessions are not always bad for businesses

No doubt, a decline in general economic activity harms both individuals and entities, but it’s not the case for everyone. Recessions can create tremendous opportunities for innovation and market disruption. One worthy example is the 2008 crisis. Many small businesses went under or were forced to lay off employees, halt expansion plans, slash spending; some had no choice but to declare bankruptcy. After the crash, however, two unicorn companies were born: Uber and Airbnb. They found a way to disrupt old business models by empowering people to find new revenue streams or offering a creative yet affordable alternative to traditional renting. Yes, the gig economy has existed long ago, but the recession helped it to become an industry of a whole new level. People couldn’t or didn’t want to rely on broken institutions, and so self-employment became a solution.

The rule may not apply to every company, but recessions usually act as filters that weed out weak business models and force leaders to adapt.

Coronavirus spurs interest for remote and digital

As during an epidemic (or, now, pandemic) physical activity is limited, an obvious choice for both ordinary people and entrepreneurs is to turn to remote and digital.

This is also not new – remote work and digital services have been growing trends for years. It is fears of the virus and global quarantine measures that rapidly accelerate the mainstream appeal. Considering remote work, this may well be a turning point in the future of work itself, which keeps moving from nine-to-five office hours towards more independence and flexibility.

So, Where To Find A Niche For A Startup?

The short answer is: where there is huge potential demand.

Here are a few industries that are likely to not only weather the coronavirus storm but also find fertile ground for disruption.

1. Virtual Conferences

As coronavirus triggers cancellations, companies begin thinking about digitizing their content. Virtual reality may be the solution to the travel bans companies are now facing and the restrictions on large gatherings imposed by governments.

HTC, for example, hosted the first fully-virtual industry conference. Usually held in Shenzhen, China, the HTC Vive Ecosystem Conference (VEC) will be entirely hosted in VR this year.

Digital conferences have several significant advantages: low price, no large gatherings and accessibility concerns, and environmental pollution reduction.

Not surprisingly, several startups are already trying to disrupt the industry. Run the World, for example, is a platform that allows conference organizers to livestream talks, discussions, and panels in return for a 25% cut of ticket sales. It is “a hybrid of Zoom video, Eventbrite ticketing, Twitch interactivity, and LinkedIn networking.”

2. Digital Banking

Consumers’ desires for digital banking services will most likely increase, forcing many traditional financial institutions to fast-track digital innovation efforts. Consequently, many large banks and credit unions may turn to fintech firms for assistance in bringing better digital banking solutions.

Moreover, weakening economies may force regulators and government organizations to stimulate the development of fintech solutions. South Korea, for example, is planning to ease regulations on fintech and some other industries in March in an attempt to facilitate its economy amid the outbreak. The World Health Organization has also encouraged contactless payments.

3. Delivery Services

Consumer spending in brick-and-mortar retailers keeps declining as people are afraid of being in a crowd and going outside in general. They’d rather make an order online, pay with their card, and receive products from a courier in a mask instead of exposing themselves to the outside world.

Moreover, coronavirus spurs noncontact delivery. US food delivery services like Instacart and Postmates have launched noncontact delivery options.

4. Streaming Services and Gaming

Quarantine measures spur people to stay at home, and so, after working for a few hours, they have more time to relax on a couch… watching some series on Netflix or playing a new video game. If the rest of the world will adopt behavior similar to that of Chinese consumers, there is going to be a global surge in people downloading entertainment and game apps on their smartphones and computers.

5. Remote Work and Online Education

Universities are moving classes online and more and more companies are instituting mandatory telecommuting policies—Facebook, Google, Salesforce, and Twitter have each asked their employees to work from home in recent weeks. Startups are hosting daily meetings, interviews, and even happy hours via apps like Slack and Zoom.

Online educational platforms see huge growth in demand, and many of them help students to not disrupt the studying process despite the quarantine – Coursera grants universities impacted by coronavirus free access to its courses.

6. Healthcare and IoT

The pandemic of COVID-19 has shown a significant lack of human and technical resources when it comes to the unpredictable contagious disease that spreads fast and infects both ordinary people and medical personnel in case they don’t have proper protection.

It shows a huge opportunity for startups that are working on the edge of healthcare, AI, and IoT to replace human doctors by sophisticated algorithms that would be able to detect symptoms, make a preliminary diagnosis as well as recommend the basic actions, like washing hands, not touching your face, and other efforts doctors are asking us to do during these days.

Summing up

It may sound a bit contradictory but recessions hit small businesses the hardest as well as create fertile ground for startups. And it is one’s business approach that determines which category a business is going to fall into. Those entrepreneurs who can weather the storm, should not view the global market volatility as a threat – for them, it can be a lifechanging opportunity.

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