Business Musings: Pivot
On August 7, Wired published an interview with Bill Gates. I had seen excerpts from it, and reactions to it (not all positive), but I hadn’t had time to read it until recently.
Gates, for those of you who have been living under a rock for the past decade, has spent the last twenty years working with the Bill and Melinda Gates Foundation, which made vaccines, testing, and treatments, mostly in under developed nations, one of its main priorities. Melinda Gates, in particular, has become an expert in the ravages of disease.
Of course, the news would rather talk to Bill Gates. He’s become an expert in these areas as well, just not as big a one as his wife. So when he talks about pandemics and long-lasting disease and vaccines, I pay attention. He knows more about this stuff than I do.
Like me, he’s excited about the innovation that has happened around a COVID-19 vaccine, therapeutics, and various treatments. I’ve been thrilled to watch the scientists work together, publish their results quickly, and do everything they can to get some kind of solution to us at a much faster timeframe than usual.
The cost is great, as Gates points out. Not just in lives, but in diverted resources. He estimates that so many scientists pivoted to COVID that they’ve lost (or, more accurately, will lose) years on their work on other diseases that ravage humans, such as malaria, polio, and HIV. We have to get this particular pandemic under control, though.
“It’s because of innovation,” he said, “that you don’t have to contemplate an even sadder statement, which is this thing will be raging for five years until natural immunity is our only hope.”
Five years, folks. Five years. We’re having a hell of a time with 8 months since this thing was identified.
The interview is wide-ranging and I urge you to read it. But what’s relevant to this particular blog post is what he believes to be the actual timetable for the vaccine. (I want you to put a pin in that for a moment, because we’ll circle back to it.) He said,
…the innovation pipeline on scaling up diagnostics, on new therapeutics, on vaccines is actually quite impressive. And that makes me feel like, for the rich world, we should largely be able to end this thing by the end of 2021, and for the world at large by the end of 2022.
- Two years before the virus goes away, or at least gets tamed enough that we don’t have to fear the damn thing every moment of every day.
Then we get to deal with the fallout. The lost lives. The long-lasting damage that so many survivors are already exhibiting. The economic fallout, which is already measured in the trillions of dollars.
That fallout will get worse. The United States is in serious trouble, which will get worse in the fall. Because our Congress left for the month of August without doing anything to support the millions who have lost their jobs and/or will be evicted from their homes, we are heading toward a major economic downturn. (“Downturn” is such a tame word for what’s about to happen.)
Even if Congress manages to get something done in the next few weeks or in the week it returns, even if it manages to set up that something retroactively, it will be too late for thousands, if not millions, of people.
I know many of you who read this blog live outside of the U.S. and think this is our problem. But here’s the rub: it isn’t just our problem. After World War II, the world based its economic strength on ours. If we get a cold, the underdeveloped world will get the flu. Some of this has been mitigated by years of Trump. Countries have turned to others for help. But not all of it. And so the world is facing a global economic crisis that will make 2008-2009 seem like an insignificant dress rehearsal.
I confess: I have trouble wrapping my mind around the extent of this growing crisis. I’m used to economic downturns that still have low-paying restaurant jobs and janitorial work. I always figured, back when I had a day job, that if I got laid off, I could go work at a restaurant again. Those options are mostly gone. Going out and getting another job, even in an unskilled field, is almost impossible right now.
The bounce back isn’t bounceable.
And…a year from now? A year from now, many of these people who need to bounce back won’t have homes. They will rely on social services at a time when social services are drying up.
In 2009, I started The Freelancer’s Survival Guide, thinking most people who wanted to start freelancing in the recession would do so because they couldn’t get another job. I’m sure a lot of budding entrepreneurs are doing the same thing right now, although I suspect there are fewer of them. Job start-ups are hard in normal economic downturns. This one has a pandemic attached to it like a blood-sucking parasite.
The Freelancer’s Survival Guide was the initial impetus for this blog post. I’m revising the Guide bit by bit on my Patreon page. I’m updating for a new decade, since the Guide hasn’t been touched since 2012 or so. The world has changed a lot since then.
About the time of the Bill Gates interview, I updated a chapter on business plans. At the same time, a friend of mine who was in charge of a large estate died unexpectedly (had not even been ill, as far as we know). Several other friends got laid off unexpectedly. And a goodly number of people I know here in Vegas are moving out of the city, something they wouldn’t have believed they were going to do if you’d talked to them in January.
Most of us know that our businesses need business plans, but so do our households. Our households—each and every one—is a tiny business, with income and expenses that, in good times, are predictable, and in bad times, might not be.
The advice I’m about to give here applies not just to a freelance business or a commercial enterprise, but also to households.
The advice, in a nutshell, is this:
- At minimum, draw up an income and expense sheet.
- Predict how that sheet will look a month from now.
- Predict how it will look six months from now.
- Predict how it will look a year from now.
- Predict how it will look five years from now.
- Review those sheets every two weeks. Make changes as needed.
Businesses (and households) that have those sheets will do better economically than businesses that don’t have those sheets. That small bit of information and prediction will allow the business to remain nimble.
In addition, you need other things:
- A plan for a bad scenario (losing your best client, for example, or your job).
- A plan for a good scenario (getting additional income, which might result in more work).
- A plan for a great scenario (more work than you can handle—which can be dangerous to an unprepared business).
- A plan for the worst case scenario (loss of a key employee, loss of a year’s worth of revenue like many arts venues are facing right now, and more).
If you do these things, you’ll be better off than people who don’t do them. You won’t scramble when the bad things happen. You’ll have a possible solution, which will give you something to start with.
You’ll find similar advice in The Freelancer’s Survival Guide. You’ll also find advice like it in business blogs and articles across the web.
The one thing you won’t find, though, is this:
Learn how to pivot.
Sometimes I call that being nimble. But it’s more than that. You need to have a crystal ball. It might fail you, as all of ours did in January of this year, but it might help. At least you’ll have a game plan to haul out should the going get rough (or get worse).
Let me give you two examples.
Zillow, the online real estate giant, posted better news than they expected in the second quarter of 2020. When the pandemic began, Zillow immediately froze hiring, slashed expenses by 25% and cut their marketing budget. They expected a big hit to real estate. After all, that’s what’s happened in almost every previous recession, and in the Great Depression as well.
Instead, the U.S. housing market is currently doing okay, because of something Zillow’s CEO Rich Barton calls “The Great Reshuffling.” Those who still have jobs or who are financially well off are redefining what they want out of their homes.
No more open concept, because everyone is online doing work or school. A big backyard, in some instances, so that they don’t have to worry about the gym. A lot of people are moving to the suburbs, and out of expensive urban environments.
But it’s not just the still-employed and well off who are reshuffling. Adult children who have lost their jobs are moving back in with parents. A lot of people have decided they need less house or cheaper homes or something that makes sense for them in this challenging time.
Since so much of the workforce is now working remotely, they no longer have to live near their jobs. They can work in New York City, but live in Nebraska, where housing prices are just plain ridiculously low by New York standards.
We’re seeing some of that personally, not just in my building here in Vegas, but on my floor. The very expensive furnished corporate rental that so many businesses used in the past to put up employees during convention season has been empty since March. Our next door neighbors moved back to Texas to live with family. The elderly lady at the end of the hall who moved in to be with her son (who lived on a different floor) is moving out today. I’m not sure where the family is going, but they’re not going to be in the building any longer. In April, May, and June, half the rental units in this building of condos emptied out of 30-somethings as it became clear that the party is over in Vegas for the rest of 2020. The job was on hiatus, and the bars were closed. As one man said to me, “What the hell’s the point of living here?”
(I find a lot of point, but I’m not here for a job or the party.)
Friends moved away. Others moved closer. Family members of mine are moving out of their long-term homes to be closer to other family members so they can support each other through health (and life) emergencies. I’m sure you’re all seeing this as well.
This reshuffling will probably slow down in the next year or so, and then we have the weight of the evictions coming, but for now, Zillow and companies like it, are having to pivot all over again. They’re more successful than they planned on being, which means re-evaluating how they work and what they’re doing in this pandemic.
Zillow and companies like it are also aware that they will have to pivot again as the reshuffling slows down. Their business in 2022 won’t be the business they had mapped out in 2019. But if they remain flexible—nimble—they’ll make it to that period where Bill Gates says we can turn our attention from the pandemic to the economic fallout.
The second example is more personal. Dean and I have had discussions about finances and the economic reality of this pandemic daily. As I blogged about in March, we took quick and drastic action in consultation with our third partner at WMG Publishing, Allyson Longueira. Our goal was to keep the company solvent, hang onto our excellent employees, and make it through this downturn in an active and healthy way.
In March, we believed that we had to hang on to the fall. We were arguing about whether there would be a V-shaped recovery (in which the economy goes down and comes right back up) or a U-shaped recovery. But I kept insisting we needed to play for an L-shaped recovery too. The shock to the global economic system was too great, I said, for us to have a real V-shaped recovery. Dean was banking on a U-shaped recovery. But it kept looking like an L to me.
Now it looks like a series of Ls –stairstepped downward until we hit bottom, wherever that might be.
Each industry is different, though, and our core industry—books—is one of the few bright spots in the entertainment industry. We publish affordable ebooks (as opposed to traditional publishers) so our book sales have steadily climbed since the pandemic began. We’re doing as many things as we can to continue growing our book sales and bringing in new readers.
Our in-person workshops, though, have gone on hiatus, just as we rented an office here in Vegas where we could hold 90% of those workshops (and avoid the expenses of the big hotels).
Fortunately, we have other uses for that space, which we will get to by the end of the year. But we had to accelerate changes we were already making. We got rid of our big warehouse/office in Oregon. The Oregon staff is in a brand new, modern office. We needed something newer, but we’d been putting it off. This one is smaller and has all utilities wrapped in. (Utilities were an unpredictable nightmare expense on the chilly, damp, and stormy Oregon coast.)
Dean had to go and help finalize the move twice in this Covid summer. We had additional planned for expenses for the move, bringing important files down here and leaving others for the new place, selling a great deal of the collectibles, and shifting things around in other ways.
We’ve cut expenses—that was our first response back in March—and we’ve found new revenue sources. We’ll find more as time goes on.
All the while we did that, we kept an eye on our writer and reader communities. We knew that people would be hurting, and we wanted to help, with sale prices on workshops, and cheaper (or free) ebooks to help people escape for a while.
But our pivot continues. Congress leaving without doing anything to shore up the American economy will have a huge impact on everyone, even those who still have jobs. Disposable income will go down this fall, and that doesn’t even count the normal slowdown of retail sales that happens during a normal presidential election year. (This one is not normal, by any stretch.)
So, we’re making all kinds of decisions, almost daily. Our actions in the first half of the year were the right ones. Our goals for our business remain the same. But both Dean and I (and Allyson and the team) are working harder than we ever imagined we would work this year.
Staying ahead of this crashing wave that is 2020 is taking a lot more effort and focus than I would have expected in 2019.
We spend an inordinate amount of time on those business plans and balance sheets. We’re reviewing weekly, sometimes daily, making sure we stay on top of and ahead of all the economic changes that are going on in the world.
I know we’re not alone. That’s what being a business owner means in 2020. That’s what being the head of a household means in 2020.
It’s a tough year, and if Bill Gates is right, it’ll be a tough 2-3 years (or more) economically. We are in a future none of us had expected. Now we have to rebuild, and build stronger.
Being able to pivot is part of that strength. As you build for the next few years, build in the ability to pivot when the times call for it. Learn how to plan for being nimble. I know that sounds contradictory, but it isn’t.
It is the essence of survival.
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“Business Musings: Pivot,” copyright © 2020 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / Ostill.