For many large, unprofitable start-ups, this will be the first true test of whether their businesses can withstand a downturn. Many of the industry’s most prominent start-up “unicorns,” including Uber, Airbnb and WeWork, have long boasted that they were born in the recession of 2008-09. They capitalized on the moment by giving people who were laid off in the downturn flexible “gig economy” work and office space. Therefore, the thinking goes, they can survive the next one.
But their businesses are now global, with tens of thousands of employees and delicate networks of millions of customers, drivers, home-rental operators — and, in WeWork’s case, potentially germ-laden office spaces. This is a whole new kind of test for their business models.
For example, many Airbnb hosts have seen their bookings fall off a cliff as the company grapples with travel cancellations. This past week, the company made its refund policy more flexible to encourage people to book travel. It even set up a small fund to keep Chinese hosts afloat during the outbreak. Tracey Northcott, a full-time Airbnb host in Japan whom I interviewed for an article, said she had lost $40,000 worth of bookings for April. She is trying to stay upbeat, joking that she may need to start selling off her supplies of toilet paper to make ends meet.
The newly announced ban on European travel to the United States only adds to the blow.
Drivers for Uber, Lyft, DoorDash, Instacart and Postmates petitioned those gig-economy companies for better protections for those affected by the virus. The companies responded by proposing a fund that would pay drivers who have been quarantined or infected. It’s a small gesture of support for the workers, many of whom have no other safety net. But it further strains these money-losing businesses when they’re already under pressure to show investors they can turn a profit.
Some companies are set up to thrive in this moment. Digital-learning services are in demand as schools close. The stock prices of remote-working tools like Zoom surged. Telemedicine is growing. Fitness fanatics are flocking to at-home workout systems like Peloton. Teenagers are turning to Instagram memes to get their virus news. Streaming and video-game companies like Netflix and Activision Blizzard and delivery services like Amazon and GrubHub have been added to stock-picker lists.
Criminals and scammers are also thriving: Hackers are using misinformation about the virus to set digital traps and steal personal data from people, Sheera Frenkel, Davey Alba and Raymond Zhong reported.
Some creative Airbnb hosts are even advertising “corona-free” getaways stocked with doomsday prepper supplies. Capitalism.
Some stories you shouldn’t miss
Oh, right, the election. The fight over what constitutes free speech online has continued to escalate, most recently with a manipulated video of former Vice President Joseph R. Biden Jr. on Twitter, Cecilia Kang reported.
The much-buzzed-about Samsung Galaxy flip phone is a dud, Brian Chen determined. Brian tested out the phone’s purported attention-grabbing abilities by conspicuously flipping it open at several bars. “Not a single person noticed or commented on my nonconformist Z Flip,” he wrote, noting that he got more attention for dyeing his hair blue in high school.
Outdoor Voices, a prominent e-commerce start-up selling workout clothes to millennial women, recently imploded, pushing out its founder and slashing its valuation by more than half, Sapna Maheshwari and I reported. The blowup revealed the business challenges facing many “direct to consumer” brands backed by venture capital, and the generational challenges between young disrupters and the experienced executives needed to help them mature.
One more virus story. There’s always a dating angle: Coronavirus and chill.
How are we doing?
We’d love your feedback on this newsletter. Please email thoughts and suggestions to [email protected].
Like this email?
Forward it to your friends, and let them know they can sign up here.
Source: Read Full Article