Crisis brings opportunity...

I've been supporting the venture capital and private equity for nearly two decades. There is a real problem in the industry: the appetite for risk has fallen in venture capital. Venture capitalists are acting more and more like private equity, especially here in Asia. (It is one of the reasons why the ecosystem continues to struggle.)

Over the last few months, I have seen memos and emails saying - conserve cash, manage headcount et al. Its code for translate that into halt development, generate profit yesterday, reduce headcount or worse (yes there is worse).

Crisis brings opportunity, VCs from the early state go late stage should be "disrupting markets" as they so often like to say during the "good times." You might say," well, I have a sovereign fund or pension fund as my LP." Please wake up! They invested you because they do need to diversify their portfolio. If in doubt, ask.

I don't need another emoji or another way to do video conferencing better. We need to be building new industries, products, and technologies that will re-make the world.

How do we decide to reopen America for business?

Since COVID-19 first appeared in Wuhan, China, in early December 2019, the contagion has become a pandemic of global proportions. The ability of coronavirus to spread from asymptomatic infected individuals is particularly insidious. Health care systems, governments, and society have strained to keep up. Cypress River Advisors is acutely aware of this because we have contracted companies to produce face shields, which we are supplying to essential workers for free. 

At the time of this writing, the US is one of the countries with the highest number of cases per capita.  

For Cypress River Advisors' clients, the haphazard global response wreaked serious economic havoc. The service and manufacturing industries have recently suffered unprecedented disruptions to their supply chains and bottom line.  In parallel to this business sector disruption, active misinformation campaigns and cyberattacks intended to sow discontent and public trust created further challenges to coordinated policymaking. Nearly half of the Twitter accounts pushing the reopening of America are bots. So how does American leadership decide the following critical questions:

• Re-open offices and factories to employees or not?

• How should vital public services be enabled while balancing the needs of citizens and civil servants? 

• Now that COVID is endemic, what to do when the second wave hits?

Ordinarily, we would turn to the data, but…

Private organizations spearheaded the data aggregation hubs effort due to slow federal response 

Availability of Data

In the early stage of the pandemic, the only reliable source of reporting data was coming from state and local data sources. Unlike other countries around the world, the United States does not provide national health care services for its citizens and consequently aggregated data does not exist without considerable effort. In fact, the CDC provided early advice to researchers and policy makers, stating: 

"States are reporting results quickly, and in the event of a discrepancy between CDC and state case counts, the state case counts should always be considered more up to date. "

The Johns Hopkins University Center for Systems Science and Engineering, The New York Times, and The COVID Tracking Project at the Atlantic led some of the more notable efforts to create and maintain open data repositories to ensure the accuracy of these numbers.

It is the opinion of Cypress River Advisors that these organizations have provided a vital and valuable public service through their data aggregation, validation, and open-source approach. 

Definitions and testing

The crystal clarity of the Center for Disease Control (CDC) numbers provides a clear status check of where the pandemic stands, right?

Let's look at the definitions first. Cases appearing in the CDC datasets and reporting from journalistic outlets represent patient cases that meet a set of criteria deemed appropriate to consider a probable COVID-19 case. Based on current guidelines the COVID-19 position statement issued by the Council for State and Territorial Epidemiologists and referenced by CDC, the definition of a probable COVID-19 case are those in which one of the following is true:

• Meeting clinical criteria AND epidemiological evidence with no confirmatory laboratory testing performed for COVID-19; OR

• Meeting presumptive laboratory evidence AND either clinical criteria OR epidemiological evidence; OR

• Meeting vital records criteria with no confirmatory laboratory testing performed for COVID-19.

It’s not as straightforward as you thought, is it?

So, what will it take to reopen America? 

In short, lots of testing. Globally, healthcare experts and economists generally agree that re-opening is contingent on widespread testing to:

• identify susceptible individuals, 

• rapidly identification and isolation of actively infected patients, 

• and facilitate contact tracing to identify people who might have been exposed from identified, contagious individuals.

However, the US has fallen woefully behind expanding testing capacity to meet recommended levels. But, before we get into that, let's examine a scatter plot that compares state-level data for COVID-19 cases versus the number of tests performed.  

View fullsize

The plot shows a correlation between testing for cases and finding cases. However, the real picture is much more nuanced. (Please note, this is a population normalized chart.)

There are two different categories of testing technologies that are intended for different scientific and clinical purposes:

1. Diagnostic testing - confirmatory test for ongoing, active infection in a patient by the virus via nasal cavity swab

2. Antibody/antigen testing - detecting the presence of a particular molecular indicator (usually a protein) in a person or the presence of an antibody against the virus in the blood or tissue. Positive results to this class of test suggest that the patient has at some time been exposed to the virus but is not evidence for an active infection.

Why does "having" or "had" the virus matter?

This distinction between having or had the virus is crucial for understanding the progression of the epidemic. Still, many states and even the diagnostic criteria recommended by the CDC conflates these two categories when deciding  whether a patient presenting in a healthcare setting is a probable "case." 

The COVID-19 position statement issued by the Council for State and Territorial Epidemiologists on April 5, 2020 details in Section VI.A2 that diagnostic and antigen/antibody testing both satisfy the Laboratory Criteria recommended for classifying a "case."

Testing lags far behind what is needed

As we previously mentioned, healthcare experts and economists widely agree that any plan for re-opening requires a robust testing system in place to monitor workers on a rolling basis. 

This means we need BOTH kinds of tests and at scale: diagnostic testing to detect outbreaks in a workplace or community, and antibody testing provides some evidence of purported workers' immunity to becoming infected and spreading the virus.

How much testing? Certainly more than what we are doing today. Harvard Global Health Institute has offered the most conservative estimate for daily tests that the US will need to safely re-open: 900,000 tests/day. This is a level that is more than double what is currently occurring (data source: The COVID Tracking Project at The Atlantic).

Again, the answer is clearly more testing is needed. At least 3-fold more than is currently possible, and at the current rate of increase, we are unlikely to reach that until midsummer.

One more complicating matter - politics and optics

Some reporting has recently revealed apparent resistance by state and local level officials to provide COVID-19 healthcare data available. The Tampa Bay Times has reported on state officials in Florida releasing heavily redacted forms outlining COVID-19 deaths: that were compiled by the state medical examiners. The paper also reported the same state official ordering coroners to stop releasing said data. Georgia has faced similar criticism after a claimed error resulting in a significant reduction in reported cases in the most beleaguered counties.

Moving forward: a science-based approach to reopening America and the world

Good decisions require good data. At the present time, building reliable forecasting models for COVID-19 cases and deaths has proven notoriously difficult. As leaders, we often need to make decisions under imperfect conditions, which is why we are issuing this management advisory note. The numbers you see on TV, conservatively speaking, reflect the bare minimum of actual cases in the US. Simply stated: COVID-19 testing is not where it needs to be. Data transparency at the state and local level are under threat.

Why should you care? Re-opening too early without the infrastructure to maintain social distancing, testing, and supporting your employees is a liability nightmare. You could, in a single staff meeting, severely impact your workforce or management team productivity. 

From a human perspective, the team at Cypress River Advisors understands the uncertainty and fear essential workers have to keep American and the world's infrastructure going while most of the population is sheltering in place. We receive their requests for personal protective equipment and listen to their stories. Action is required by everyone. If we do not address COVID in a comprehensive manner on a global basis, economic and social recovery will occur in a halting manner. That’s bad business for everyone involved.

Hopefully, in the coming months, testing capacity will expand, and data transparency and reporting will improve to a sufficient degree. The reality is that we will need to act conservatively on reopening. 

Pandemic Survival Strategies

TUE, MAR 24, 2020

Pandemic Survival Strategies: A Leadership Guide for Organizations Wanting to Weather the COVID-19 Storm

Jason Wang, Cypress River Advisors and David Bray, PhD, Director
Atlantic Council GeoTech Center

COVID-19 is impacting the global economy. 

Both of us witnessed the impacts of the Severe Acute Respiratory Syndrome (SARS) outbreak in 2003, though from different perspectives. Jason was in East Asia and witnessed the fear and market collapse that happened then. He drafted this initial version of the guide. David meanwhile was in the U.S. with the Centers for Disease Control’s Bioterrorism Preparedness and Response Program and saw the outbreak from a public health emergency response perspective. 

Fast forward to 2020 and now we have a global pandemic with effects that will change the way we work, live, and interact for some time to come. At the time of writing, some 20% of the world’s population find themselves under lockdown and the economic powerhouses of Europe and North America grapple with the realization that they are now the epicenter of the unfolding COVID-19 pandemic. The prospect of global economic depression looms. 

While the pandemic is serious, however, we can and will get through this. This article is about more than business continuity planning for organizations, be they in tech or NGOs, that seeks to provide value to people. This guide is about good leadership in turbulent environments. If we act smart and if we are willing to invest in each other, we may all come out of this situation faster — and potentially stronger. 

1. Your Team, Customers & Community

Let’s start by looking at the factors that have to do with your team, your customers and your community. Remember that these three groups do not exist in isolation (even when we are practicing social distancing) but are interconnected. This is why it’s important to remember that for every problem there exists a finite set of positive outcomes but an infinite number of negative ones. This is why we advocate “failing fast.” Agility and flexibility are key.  

In times of crisis, this is when you invest in your team AND in your customers. It isn’t an either/or zero-sum game. After all, without your team, you can’t support your customers well. And without your customers — well, sooner or later you won’t have your team anymore. Give them all the support and leeway you can. Perhaps your employees will also be looking after their children during this time, which may also include being responsible for their schooling. Keep in mind your contractors, who will have it even worse. They will all require your help, your understanding, and your patience at this time. Activating the creativity of your employees to find solutions that work for them and you is your ace in the hole now. To do that you need effective and open communication. 

Effective and open communication between all parties is of the utmost importance when transitioning to the work-from-home reality of social distancing. With everyone spread out, take nothing for granted in terms of making sure that everyone knows what is going on, and why. It is better to over-communicate and be transparent with your actions.

In terms of your responsibility to your team and community, stay up to date with and abide by the best practices with regard to the pandemic as defined by local and global health officials. Adopt conservative measures rather than taking unnecessary risks. If you look at the countries affected earlier by the pandemic, we are looking at a minimum of six months before the outbreak is brought under control. Presumptions of “two weeks and we’ll be back” are unlikely given that some nations have as yet been unwilling to recommend a lockdown. Provide whatever material (such as personal protective equipment) or logistical assistance you can to your employees, your customers, and your community. 

2. Assess Your 360-Degree Exposure

To navigate the storm, you’re going to need to be as open-eyed as you can regarding your company’s exposure and where the greatest risks or liabilities are likely to come from. Examine the macro scenarios to your revenue, your supply chain, and your operations. This exposure analysis needs to expand beyond your company.  You want to consider the impact of the crisis on your customers’ capital and operational expenditure as well. These are your market opportunities. How can your company help your customers be more efficient and profitable? 

Plan for the worse by modeling the edge cases — the severity and duration of ongoing lockdowns, for instance, or the effectiveness (or not) of government attempts to keep the markets afloat. Use such extreme scenarios as a way to help you understand the range of operational options open to you. At the very least, as we’ve already mentioned, you can expect scenarios where a significant portion of your workforce will be working remotely. In preparation, you need to consider how you will ensure the confidentiality, integrity, and availability of key data and communications between employees. You will quickly need to invest in VPN connections, hardware and software keys necessary to secure your communications in such a way that you don’t lose your trade secrets.  

3. Consider Your Liquidity

Liquidity is critical. Liquidity gives you the flexibility to respond in the rapidly changing situations as we endure the recovery and resurgence of COVID-19 cases in the months ahead. As with your exposure modeling, look at edge cases to determine when to define “red lines.” Undertake a thorough examination of your human resources, supply chain and inventory in order to conserve cash.

This is, again, also an area where having a customer-centric perspective is of vital importance. In your 360-degree exposure assessment, such a perspective should guide all your activities necessary to build trust and loyalty as both sides seek to meet the challenges posed by COVID-19. We reiterate: a zero-sum, I-win-you-lose mentality is a failing strategy. Look for “win-win” with your partners. You, your customers and your supply chain partners will rely on each other to keep things moving and maintain liquidity. 

Make decisions to determine which of your resources need to be allocated on current AND future revenue. It’s important to bear in mind that as the pandemic runs its course there will be successive waves of infection and recovery. Make your plans accordingly and be strategic as you do so. Unexpected opportunities may arise and there is nothing wrong with pursuing a chance that comes your way. But make a judgment call on what impact it could have on team focus — or the chance of a negative cash flow scenario. 

4. Fight the Good Fight (aka, Reject Paralyzing Fear) 

Even the worst storm blows itself out eventually. The COVID-19 pandemic will not last forever, so plan for the recovery! 

As Jason notes, did you know the word for crisis (危機, weiji) in Mandarin shares a common character with the word for “opportunity”  (機會, jihui)?  That character (機, ji) can be translated as a “turning point” or “crucial moment.” 

As David also notes: It is the choices that we make as humans, choices in how we respond to the turbulence presented to us, how we learn + do + adapt to changing circumstances, and how we partner with others that can help move our world forward in a positive direction that ultimately shapes the future. 

Choices in the turning points before us matter. Remember: “Fear is the mind-killer.” Stress-induced panic will lead you to second-guess your intuition and your judgment, bringing mistakes or what can be even worse, the paralysis of inaction. It’s often better to make a wrong decision than no decision at all. One adage to consider: FAIL isn’t failing, it’s the “First Attempt at Iterative Learning.” 

The world is changing before us. As leaders, we don’t want you to be entirely risk-averse during this period. As leaders, you are hired to be risk-accepting and drive opportunity, right?  The adage “nothing ventured, nothing gained” still applies. Leverage your exposure assessment and your customer relationship management to identify possible opportunities. 

In the same vein, consider what kind of marketing and messaging you will need to catch the wave to recovery. Many businesses have started to do this already, so much so in fact that companies contacting their customers to tell them how they are handling the coronavirus crisis has become something of a source of online humor. If you can find something original or unique to say, this is an opportunity for you!

During every downturn, there is always an opportunity to leapfrog competitors. Ask yourself: Where can you invest in your people, your plant or your operations?

Be Benevolent, 
Be Bold, and 
Be Brave in our challenging times. 

The COVID-19 pandemic will take some months to resolve and potentially longer. The world will certainly be changed by it. So treat it as an opportunity. We believe these suggestions offer the best chance to ensure that your startup will rise to meet the challenges of this crucial moment. 

We all can lead. Positive “change agents” — individuals willing to work across sectors and nations to help illuminate better ways through the shared turbulence we are experiencing — are needed now more than ever. We hope you’ll join the good fight against the COVID-19 disruptions alongside us.

More about the GeoTech Center and Commission

Championing new technologies and data to benefit people, prosperity, and peace.

https://atlanticcouncil.org/commentary/pandemic-survival-strategies-a-leadership-guide-for-organizations-wanting-to-weather-the-covid-19-storm/

Survival Strategies for Startups

Years ago, I wrote a version of this during the SARs crisis for the telecom operators. East Asia was paralyzed with fear, and the market tanked. With COVID-19, much of what I wrote is unchanged. Mind you. This article isn’t about business continuity planning. This is about good leadership. If you are a startup trying to figure out what to do, here’s our survival guide in a nutshell.