Almost four months ago now, as we first entered the start of the Covid crisis we wrote about how the pandemic would accelerate the adoption of new technology and act to accelerate the sad decline of the ‘old economy.’
It was, on current evidence, an accurate assessment of the state of play.
Writing this month in the Sunday Times celebrated economist Irwin Stelzer was crystal clear in his assessment too; that bankruptcies and unemployment would soar in the last quarter of the year as ‘trillions are spent trying to prop up dinosaurs. Even the CEOs of major businesses were chipping in. Ocado CEO Tim Steiner explained, in no uncertain terms, that there has been a ‘permanent redrawing of the landscape.’
The ‘dinosaur’ point here is interesting, and important, as it points at the fact that whilst the virus has caused untold damage to health and economies it has created an environment that has exposed business models that are simply not up to operating in today’s world.
As Warren Buffett so eloquently puts it – ‘when the tide goes out you see how many were naked swimming.’
In his own words the businesses being propped up will be ‘the walking dead – zombies sopping up resources better reserved for businesses of the future.’
And he’s right. As controversial as that may be this time it is really is different. Consumer behaviour has forever been changed by lockdown and businesses in turn by this and the exposure of the weaknesses inherent in our old economy.
Supply chains, travel, personal hygiene and space, urbanisation, work, medicine and healthcare and many more besides will never be the same again.
The cost of change
But as with all major changes there is a cost and like many economic impacts that have gone before that will, in the short term, mean that many millions will be out of work.
Look in the wrong places and the view is incredibly dark and gloomy – but there are also incredibly bright spots already appearing, and none so more than in digital.
As a fund that is focused on the sector, and one which invests into exciting digital disruption plays we’ve seen significant jobs growth since lockdown with 30% of our existing portfolio raising significant fresh funds to take advantage of the opportunities created by accelerated digital adoption.
How Haatch is helping
By way of example, our portfolio now directly employs almost 300 people, with more than 100 of those roles being created since May 1st. Amazon has added to its roster by creating more than 175,000 new roles. Delivery companies are falling over themselves to fill roles, whilst the NHS and other healthcare providers cannot advertise fast enough.
There can be little doubt that the changing economy is creating havoc across retail and hospitality in particular, but all is not lost, despite claims to the contrary.
Yes, according to analysis by consultancy McKinsey, global working hours reduced by 7% overall in the April to June period at the height of the pandemic, but new jobs are also being created everywhere, with digital leading the charge.
Instead the focus should now be on how we retrain and educate those out of work as well as those in education to ensure that we create a workforce fit for the post-covid era.
The temporary decline of some industries provides an opportunity for upskilling toward future-skill-growth areas. This means both rapid upskilling for short-term demand surges, such as in grocery retail, and longer-term upskilling or reskilling that enables individuals to move into careers aligned with future-skill trends, such as health services or digital.
The task ahead is therefore crystal clear: No matter where a person lives and what their income levels, everyone must have the digital access and tools, as well as literacy, to be successful in a digital world.
Yes, sadly, over leveraged business, or those out of step with our accelerating digital world will now face tough times ahead, but for those agile and innovative enough, the future really can still be incredibly bright.
We want to be part of that solution, by backing and supporting some of the most exciting employers of the future, one transformative start up at a time.
