“You never want a serious crisis to go to waste. And what I mean by that is it’s an opportunity to do things that you think you could not before.” – Rahm Emanuel, as quoted by a reporter for the Wall Street Journal in November 2008.
With the above words, the incoming Chief of Staff of the Obama administration famously channeled Stanford Nobel Laureate Paul Romer’s saying, “A crisis is a terrible thing to waste.” Waste it they did not. Acting with speed and purpose, the Obama administration was able to push forward transformative legislation such as the American Recovery and Reinvestment Act of 2009 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which not only helped address the acute crisis but contributed to the decade-long period of economic expansion of the 2010s.
We are now in the depths of another crisis; this one caused by a virus, not avarice. It’s clear that the COVID-19 pandemic is going to worsen in the coming weeks and potentially months, with at least tens of thousands of more infections and thousands of more deaths. This is fueled by several factors including a highly contagious virus (a reproductive number of 2–2.5, compared to 1–2 for influenza), systemic failures in containment and testing, an overburdened healthcare system, and a frenzied media that’s infected the public consciousness. Misinformation has already contributed to everything from a paucity of basic supplies at grocery stores to a surge in xenophobia. Real and perceived fears have severely wounded the global economy, obliterating $3 trillion in wealth on the stock market and an estimated $100 billion in global airline revenue this year. Notable venture capitalists such as Alan Patricof of Greycroft, Aydin Senkut of Felicis, and Roelof Botha of Sequoia are warning their portfolio company founders and CEOs to proceed cautiously; indeed, the latter even issued a memo calling Coronavirus the ‘Black Swan of 2020’, as they did in 2008 in a similar memo, “R.I.P Good Times.” (Disclosure: Patricof and Senkut are investors and Board Observers in my company, Osmosis).
Crises like these force individuals, companies, and societies to adapt in real-time, or suffer the consequences. As Intel’s Andy Grove famously said: “Bad companies are destroyed by crisis. Good companies survive them. Great companies are improved by them.” Over the last few weeks, I’ve been speaking with fellow private company CEOs about what changes the coronavirus is catalyzing in their businesses that they believe will make them stronger moving forward. A number of these changes were already in the works but have been accelerated out of necessity as coronavirus has spread around the globe.
Greater acceptance of distributed work practices
There has been a decades-long trend in distributed, or remote, work enabled by telecommunications. Between 1980 and 2017 the percentage of US adults working primarily from home skyrocketed from 0.7% to 3%. Employees often report greater satisfaction due to the increased flexibility in their schedules, decreased commute time, and ability to spend time with families, while employers cite greater productivity, a wider talent pool, and reduced office costs as benefits of distributed work. In my own experience leading a totally distributed company—we have over 60 employees and contractors across six continents, with the largest number of co-located teammates being in Atlanta, Georgia—I can vouch for these advantages particularly when it comes to satisfaction and recruiting. With the exception of a few high profile examples like Yahoo, Reddit, and IBM, many companies have observed these benefits and introduced “work-from-home” policies ranging from a set number of days per month to 100% flexibility.
Just over the past month, COVID-19 has led to several major companies such as Apple, Amazon, Facebook, Twitter, and Box embracing distributed work across their entire global workforces. The virus has been a forcing function for individual employees, teams, and companies as a whole to assess how “remote-ready” they are; that is, how capable are they of performance and communication without being able to work in a co-located environment? Several notable companies that enable distributed work such as Zoom, Slack, and Microsoft are reporting spikes in demand (Microsoft’s Team product has seen a 500% increase in utilization in China), as well as their stock prices. While the S&P 500 fell by 9% since January, Slack’s stock is up by 16% and Zoom is up by 42%. According to Owl Labs, approximately 44% of companies still don’t allow remote work—a number that will almost certainly plummet in the coming year after the acute COVID-19 crisis has passed.
On a related note, marketing and sales departments have been forced to scramble to figure out how to adapt to the hundreds of canceled conferences such as South by Southwest (SXSW). At least four conferences that our team at Osmosis was planning to attend in March have been canceled. These cancellations have led to the emergence of virtual conferences such as HIMSS (which canceled for the first time in 58 years) to keep speakers, vendors, and their potential clients engaged.
Increased utilization of telehealth
As with distributed work, telemedicine has benefited from significant tailwinds over the past decade and is estimated to be a $36b industry this year in the US. According to the American Health Insurance Plans (AHIP), 96% of the nation’s large employers (500+ employees) offer insurance plans that cover telehealth, though utilization rates have traditionally been low at under 10% in part due to unfamiliarity with the offering and switching costs. The promise of telehealth is that it offers employees and general consumers a convenient and less expensive way to receive care, indeed spawning a host of direct-to-consumer telehealth companies like Hims and Ro. For employers, it can save healthcare costs as well as mitigate the need for employees to leave work to receive care.
With the present COVID-19 crisis telehealth companies are beginning to see increased demand for virtual visits that can reduce potential exposure to infected patients and/or help people triage their symptoms before deciding to seek care. For example, American Well has seen an 11% increase in virtual patient traffic in the week following the first US patient death from coronavirus on February 29th. And as with Slack and Zoom, the publicly traded telemedicine company Teladoc saw a 23% increase in its stock price in February relative to the 9% drop in the S&P 500. In addition to rising consumer demand, telehealth companies received a boon in the form of a $500 million expansion to waive restrictions on Medicare telehealth coverage which is aimed to encourage senior citizens to seek virtual care where possible. Similarly, CVS’s Aetna health insurance unit has waived co-pays for telemedicine appointments over the next 90 days in order to promote utilization, which will hopefully reduce the eventual in-person burden on urgent care clinics and hospitals.
If telemedicine can reduce the need for in-person care visits, education can, in turn, reduce the demand for virtual care visits. This is why we’ve seen so many handwashing tutorials pop-up in recent weeks, from the viral (pun not intended) TikTok dance to Ellen Degeneres. Speaking from our experience at Osmosis, our videos on COVID-19 and how to diagnose it have seen the most rapid increase in view counts among the hundreds of videos we’ve released. On March 5, Rishi Desai, MD, MPH, Chief Medical Officer at Osmosis, Infectious Disease Physician and Former Outbreak Investigator at the Center for Disease Control, answered questions about COVID-19 in the live AMA below. You can follow Osmosis on Twitter to tune into future AMAs.
Rapid adoption of online education
It’s been nearly a decade since the rise in massive open online courses (MOOCs) such as Coursera and edX as well as online program management (OPM) companies like 2U and Noodle. As with their counterparts in distributed work and telemedicine, during that time a number of these online education companies have achieved scale with revenues in the nine figures and valuations in the billions. The COVID-19 crisis will almost certainly be a gauntlet and boon for the online education industry.
Already there are over 290 million pre-K to 12 students around the world who are missing class due to school closures, forcing many working parents to either miss work or, as above, work remotely (another reason for companies to evolve their distributed practices quickly). This number is quickly rising as the virus spreads rapidly throughout the US, Italy, and other countries. Just recently, Stanford and other universities announced closures that may stretch through the entire Spring semester. Last week I was at an education conference and spoke with the CEO of one of the largest MOOC providers who said that their institutional partners have been coming to them to increase availability to their online course catalog because students and faculty are forced to “socially distance” themselves. As with teleworking though, online education models will have to quickly figure out how to address several challenges such as student loneliness, online proctoring of assessments, and education that traditionally required in-person observation (e.g. physical education or procedural skills). I’ve previously written about the potential for online education to rapidly scale up the training of healthcare workers, from doctors and nurses to home health aides and paramedics, and am closely observing how companies in our industry adapt to the increased demands that COVID-19 is placing on us and our learners and faculty.
Conclusion: Becoming Antifragile
The author of Black Swan, Nicholas Nassim Taleb, also wrote an insightful book called Antifragile, which describes systems that become stronger when they absorb shocks. The individuals, companies, organizations, and societies that adapt quickly to crises like COVID-19 by embracing distributed work, telehealth, and online education among other trends are likely to emerge from this particular crisis stronger than before and more prepared to withstand the next one.