It is human nature to seek a silver lining in what is obviously a very dark cloud.
This is the third in our series on how Coronavirus is changing our world. The first looked at how this is crashing legacy financial markets. This was the destructive part of creative destruction. The second in the series was a hopium dream of a positive post Coronavirus future in general terms – not business as usual but better. Now we turn to some specific positive impacts from Coronavirus enabled by technology.
Futurology warning – the direction of travel is clear, the speed of travel is much harder to figure out ie don’t ask me when this will happen.
1. Faster/cheaper drug development.
The problem: new drugs costs $2.6 billion to develop, so they have to be sold at a high price. Worse for people who need help now is that it takes 10 years when 10 months is too long.
The pieces of the puzzle to create a solution to this have been around a long time – the Internet to share research, generic drug vendors, open source, genome data.
We need what Linux did to software to happen to medicine.
The desire for that and the pieces of the puzzle are there. The bug from Wuhan brings us two catalysts for positive change:
- Urgent need from billions of people. If you have a vaccine or a cure that works, finding customers will be easy.
- Political pressure to create economically viable solutions in months not years. The big cost in money and time is in proving that it works and is safe ie in the trials phase.Think of the motivation of people who work for regulators such as the FDA. There is every motivation to slow down the process; releasing a dangerous drug is very bad for your career. Now those same people have to weigh the cost of doing nothing – which could be equally career damaging.
In the past we had diseases that impacted lots of poor people that the market ignored or diseases that impacted a few rich people with little political clout to put pressure on the regulators. Bill Gates famously pointed out the market failure of more budget going towards curing male baldness than malaria. Coronavirus impacts everybody, rich and poor alike, so there is both cash to fund development and political incentive to speed up trials.
Faster/cheaper drug development is a natural for new technology such as Security Tokens that democratise investing (see point 6). Imagine somebody on a clinical trial seeing many people starting to get better and asking “I wonder if I can buy a stake in the company that makes this drug?”
2. Better air quality
The images from space showing reduction in pollution in places like Wuhan and Italy are inspiring. Clearly factories will restart and planes will carry passengers again, so this maybe just a temporary halt to destroying our planet. However there is likely to be some behaviour change when people figure out that better air quality improves health and productivity and that it is a talent magnet. You hear this when you speak to foreigners making fortunes in China who want to return home, albeit to less money, because pollution is harming them and their family (and bad health is costing them money as well as ruining their quality of life).
Some people may also change their behaviour because they believe that factories and transport built to run on fossil fuels are driving climate change (some may disagree, but behaviour change does not need everybody to change, just enough people).
The people invested in fossil fuels know this. That is why oil prices are so low, making it hard for renewable energy to compete. This is where technology, specifically Fintech has a big role to play.
Renewable energy that is funded through both Security and Utility Tokens can tip the balance towards renewables. Security Tokens can reduce the cost of capital and Utility Tokens can reduce the cost of marketing. Imagine working with a community to switch over to renewables using a particular supplier and everybody in that community investing in the Security Token of that supplier.
This the same thing that can enable faster/cheaper drug development.
3. Better decentralized work.
Millions have been forced to work from home by government decree. For many this is a very bad experience. It does not need to be. Some companies have done very well with decentralized working (aka work from home) and have achieved benefits for both the company and the employees.
There are two scenarios for our post Coronavirus world. One scenario is that as soon as the lockdown is over we will return to commuting to work. The other scenario is that some employers and employees will change their behaviour in a way that ushers in a new era of decentralized working.
Many employers are looking at this as a simple cost cutting lever by not renewing office rental leases.
However there are also companies such as Automattic (creators of WordPress) that have operated a decentralized work environment at scale for many years and take a more strategic view that it is about being a talent magnet. As Daily Fintech (which uses WordPress) has also operated a decentralized work environment since inception in 2014, I can vouch for this personally. When looking for talent, location is not a factor we need to consider. Listen to CEO Matt Mullenweg explain how and why they do it.
The obvious play is using/investing in tools to enable communication such as Zoom, Skype, Teams, Slack, Hangouts & WebEx. However it is more about the culture than the technology as Matt Mullenweg explains.
For the employees, hitting delete on the commute is the easy part. The hard part is:
- finding companies with a good decentralized work culture.
- replacing external discipline (what your boss tells you to do) with internal discipline (what you decide is needed to be effective).
- Replacing work relationships with local relationships (family, neighbours etc)
4. Digital + Private payments.
Cash payments are less popular due to coronavirus. Some businesses ban cash payments to protect staff from potential infection risks associated with contaminated cash. Some consumers do this voluntarily, using a card even for small payments, rather than run the risk of infecting the cashier.
With health and safety top of mind we don’t worry about privacy (eg the cops noting I have more than my allotted amount of toilet paper!)
In the ideal world we will get the payments magic quadrant of digital + privacy. Many in the cryptocurrency world are working on that. We are not constrained by technology. The constraint is human inertia. Maybe we don’t care about privacy until it is too late, until an authoritarian government can track and control your every move. That is already true in China.
I am optimist who believes that enough people will choose freedom and that private digital payments will be a key part of their life. The people who care about privacy may be derided as fringe nuts today when the consensus is that it is OK to sacrifice privacy to get security and a better shopping experience, but innovation adoption usually happens first at the edge.
5. Democratized AI & automation.
There are many reasons why we do not want to go back to business as usual. We want freedom of movement and assembly of course, but we do not want to go to path we were on leading to machines making everything for and decoding everything for us.
AI & automation can be good if that power is democratized. AI & automation can lead to deflation which, despite the scary use of the word, can be a good thing – who does not like prices falling?
AI & automation are not good if they take away our ability to work and get paid and if all the profits go to a handful of people, leading to even greater inequality
What we want is AI As A Service and Robots As A Service, both based on an open source software and open source data. The pieces are in place – open source business models, Internet delivery, civic minded developers willing to donate time to a good cause – so it only takes an entrepreneur to bring these services to market. Then those services can be used in businesses that are funded via Security and Utility Tokens.
6. Democratized investing.
Back in the day, individual investors funded their retirement and kid’s education by actually researching the fundamentals of a company.
Some did it spectacularly well, like Warren Buffet, but thousands did the same thing on a much smaller scale, researching the stocks of companies that made products that they liked.
The reality during the everything bubble was that 75% of stock market trades were done by computers. The algorithms look at things like words in a speech by central bankers and sentiment expressed by day traders on Twitter.
The 25% of trading done by humans is mostly done by Hedge Funds which means that investors pay 2 and 20 (2% of funds under management and 20% of the capital gains aka profit) for the privilege of human judgement.
Patient investing in individual publicly listed stocks only makes sense when valuations are low enough. Post the Coronacrash, prices are low enough. Great profits can be made and here is the secret that the financial services industry does not want you to know. Your competitive advantage comes more from knowing which products are good than from financial expertise. You need some basic financial analysis tools and techniques, but they are simple and many are free or very low cost. What matters more is seeing from your own experience which products are better. For example look at tools we use from our lockdown location such as Zoom, Skype, Hangouts and WebEx. Each is owned by a public traded company where you can buy or sell the stock.
Ultra High Net Worth Individuals (UHNWI) working through their Family Offices are retail investors on steroids. Like JoeQ Public they make their own decisions, they are not intermediaries who are motivated to go with the herd. Unlike JoeQ Public, each Family Office can deploy a lot of capital. Family Offices are the decentalized central bankers of the post Coronavirus era, who may lead the investments that will both profit their family and create a better world.
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