Talk of an economic downturn can be frightening, especially one precipitated by a pervasive health crisis. At times, I’m overwhelmed by the images of countless patients on life-support and the near-endless streams of statistics regurgitating bad news.
Having started in venture at the beginning of two recessions, I’ve seen how the startup industry functions during economic trouble. My second day of work at Charles River Ventures was September 11th, 2001. My first project, analyzing the VC industry, propelled the firm to return more than 60% of its fund to investors, going from a $1.2 billion fund to $450 million. In May 2008, Mike Maples and I founded Floodgate in the midst of the Great Recession. We learned that great founders won’t wait for a better economic moment to start a company.
While we are currently embroiled in personal and professional circumstances unimaginable even three months ago, these very challenges will form the basis of incredibly innovative ideas. In order for the world to move forward, we need our greatest minds to imagine a brighter future and create solutions to make it a reality.
When I analyze our society and novel health situation, one thing is certain: COVID-19 is a paradigm-shifting event, creating massively accelerated social and economic change.
The Great Reset is not just another economic event
Our current situation is unique. It’s not merely a cyclical economic event, nor is it a stand-alone health crisis. What we are experiencing is not just an inflection point: it’s a societal phase-change unlike anything we have ever seen. We face an epic choice of how we move forward, and the decisions we make today will shape an entire generation.
Here’s why: COVID-19 is prompting us to reset many of our most fundamental behaviors. These changes are impacting our financial system, with effects visible throughout our homes, businesses and even the concept of “workplace” itself.
COVID-19 is pervasive
As a global pandemic, the virus itself has spread to nearly every country in the world.
Between February 20 and March 26, 100% of the world’s 20 largest economies implemented government-mandated social distancing. Globally, the number of scheduled airline flights is down 64%. In some countries, like Spain and Germany, flight numbers are down by more than 90%.
Since the timeline for lifting government restrictions is unclear — and even then, scientists are uncertain how the virus will spread — the question lingers: How long will this go on?
COVID-19’s impact is uncertain, long-term and potentially undulating, affecting every facet of our lives. You can’t simply wait it out with the expectation that industries will rebound. In 2001, September 11 felt pervasive, but its economic impact ultimately stemmed from just a single incident and the resulting fear — and that single incident still cost more than three trillion dollars. How much larger will COVID-19 be?