“EU economy suffers record drop during lockdown months,” “US second-quarter GDP plunged by record 32,9%”—that’s the headers we see all over the news today. That’s how coronavirus and the following cessation of business activity impacted countries all over the world. The global economy struggles from the quarantine measures, but for them to be lifted, humanity has to achieve herd immunity—a situation when a large portion of a community (the herd) becomes immune to a disease, thus significantly reducing its spread.
There are two ways of achieving herd immunity: vaccines or natural infection. Undoubtedly, the former is an ideal approach, and medical researchers are working hard on vaccine development. However, a considerable cohort of experts think a vaccine is unlikely to become widely available before mid-2021, so there is a high probability that the quarantine measures will not be lifted until that time. Indeed, some countries might—and already do—transfer to the adaptive quarantine, but some of the restrictions are sure to stay for a while.
The global startup economy is worth nearly $3 trillion and generates employment for an enormous number of people all over the world. Yet, startups are quite vulnerable. In the wake of the Covid-19 pandemic, when offline sites were ordered to close and consumer demand plunged, founders quickly felt the lack of profits and the urge to decrease business activity and layoff workers. Sure, venture capital could have helped entrepreneurs to weather the storm—and investors did actually save a lot of startups—but in such turbulent times, many venture capitalists would rather play safe and not waste their money on what is uncertain—they tend to wait till the fittest survive.
Indeed, such a situation is not true for all of the startups. As it usually happens, when some lose, others win, so there were both startups that had to lay off employees and significantly cut on spending and those who saw their industries accelerating. Video conferencing, collaboration software, and e-commerce are among those lucky ones who thrive under Covid-19. For companies like Zoom, Microsoft Teams, Amazon, and Shopify the pandemic, despite its dire public health consequences, has become an enabler.
Idealogic has been working with startups of various types for quite some time, and we believe that although there are some exceptions, today most entrepreneurs need to be on the safe side—slow down their business activity and reconsider expenses. For many newcomers, it’s quite unreasonable to invest in aggressive growth when there is so much uncertainty. We’d recommend to concentrate on the product and take the time to prepare for the startup launch.
For those having or developing an idea, now is the perfect time to work on Product Design (check out our article on why it’s important). It is an essential stage of the overall product development that helps to validate the concept, deep dive into product requirements and potential issues as well as prepare product design and specifications.
Summing up, when something goes not as planned, try finding another way our and take from the situation as much as possible. If you run a business, carefully consider what should be done for it to stay afloat; if you want to launch a startup, concentrate on preparations and take the time to design and develop a truly outstanding product. When the situation stabilizes, we are sure to see a quick burst of decent and well-prepared startups.