What startups can do amid Covid-19

This article is from an episode of Matrix Moments by Matrix Partners India, a podcast featuring candid conversations on what it really takes to survive the startup world. This is heavily revised from the original show transcript. For the full interview, go here.

With the rapid evolution taking place in the global business environment, we’re dedicating today’s episode to discuss and decode the implications of the Covid-19 outbreak on the startup ecosystem.

Photo credit: Kay Lau

Rajinder Balaraman, director of Matrix Partners India, and Matrix Partners founder and managing director Avnish Bajaj talk about how things may play out amid the crisis and how startups should respond.

Rajinder Balaraman (RB): Any thoughts on the current panic over Covid-19? Is it warranted?

Avnish Bajaj (AB): There are times when a disproportionate response is the proportionate response. I think this situation needs a disproportionate response.

What we really need to do is cut the number of people that can get infected by just increasing social distancing and social isolation. So I think it warrants a very, very aggressive response from all of us – not just from the government – over the next two, three, four weeks. And hopefully with that, we will tide over it.

RB: How would you compare this crisis to the ones that we’ve seen before? What is the possible impact on the startup ecosystem?

AB: Obviously, none of us have seen this before, so the economic impact is unclear. You’re seeing the Federal Reserve in the US cut rates to zero, and people might compare it to the global financial crisis or the dot-com bubble. But I think this is very, very different. This is a combination of a health and an economic crisis.

I don’t know how this measures up to the other crises, but if it plays out like China – where after six to eight weeks factories are now coming back online – tech and startups are going to see the shift because they can rebound very quickly.

But this outbreak is much harder to call. If we continue down this linear path, that would be great. I’m afraid this may not happen unless we really hunker down and start practicing social distancing norms. If that happens and the heat comes in the end of April to mid-May and there may be no coronavirus, it’s going to be a very rapid uptake for tech and startup companies.

But I think the answer will be clearer in the next two to three weeks.

RB: What is your perspective on an appropriate response for companies today?

AB: I think working from home is the easiest tactical part of it. But the Boston Consulting Group came out with a report that has some other good strategies. It answers questions like, “How do you plan through something like this and bring business continuity?”