Gobi Perspectives #5: COVID-19: Go Home, then Go Big — by Kay-Mok Ku
While the CoVID-19 outbreak is a biological pandemic, its collateral damage is mainly psychological and economic. Without a vaccine to go to battle with such a highly transmissible beast, governments all over the world have resorted to isolationist behavioural measures. This effectively shuts down both supply and demand at the same time.
But we will get over this. Just like we got over the 1918 pandemic, which happened in the midst of a world war.
Venture capital thrives on disruption which is why our core mission is to fund unicorns. Now that a black swan has brought all unicorns to their knees, what are the possible investment themes after the post-corona economic reboot?
1. Resilience in Distribution
We may need an integrated online-offline (omni channel) approach to serve consumers so this may result in a wave of mergers. Besides e-commerce companies buying up retailers, it is not inconceivable that Netflix may take over distressed movie chains and Zoom acquire co-working spaces. In times of crises, we may even witness public-private distributorship, where governments “nationalise” distribution of critical items. This should finally put an end to panic buying of toilet paper!
2. Reliability of Operations
CoVID-19 has provided a strong use case for automation. Robots and autonomous driving can keep our factories, hospitals and transportation humming while ensuring the safety and health of frontline and assembly line workers. To support such automation, 5G deployment will begin in earnest this year, and venture investment will shift from smart phones to smart things (robotics & IoT).
3. Redundancy of Supply Chain
Free market globalisation will be re-examined under the lenses of national security to ensure supply side redundancy. Over-concentration of supply chain of basic or medical necessities in one country is a single point of failure. ASEAN can potentially stand to benefit as an alternative global supply chain provider.
If SARS is a useful guide, we may actually start the year working from home and quarantining our urges but we could end it with out of home spending surges… We know we have won the battle by the end of the year, if we can proclaim the arrival of GoBIG-20!