Coronavirus
Second Order Effects
Failing to consider second- and third-order consequences is the cause of a lot of painfully bad decisions... Never seize on the first available option, no matter how good it seems, before you’ve asked questions and explored.—Legendary Investor Ray Dalio |
Second-order effects is a mental model that helps you make better decisions. It is particularly important now during the Coronavirus crisis. When we think of the future, we tend to think of obvious and immediate consequences. As a result, we tend to ignore the domino chain of effects. When you see future challenges, you can avoid them. When you see future opportunities first, you can capitalize on them first. |
Second-order effects are often surprising. Who would’ve thought that cars would eventually lead to hotel and restaurant chains. |
About This Doc | About The Creators | |||
This document helps map the possibility space of Coronavirus effects. It helps us understand how it could transform our lives as individuals, workers, volunteers, entrepreneurs, and citizens. It was developed via a combination of listening to podcasts, reading reports, and consuming articles; talking to friends in different sectors; and personal reflection. Hat tip to @balajis and @chamath. |
|
This is a Collaborative Project | Top Contributors | |||||
We originally created the table for ourselves. After sharing it with a few friends, we decided to make it a collaborative project where anyone could contribute. We want more diversity. | If you’d like to be a contributor, fill out this short form. |
|
|
|
| |
Navigate
Personal | Business | Investing | Education | Government | Other |
|
|
|
|
|
|
Personal
Category | Second-order Impact | Third-order Impact | Opportunities |
Family | Husband, kids, and wife spend 10x as much time together |
|
|
|
| ||
|
| ||
Deeper understanding of each other. (i.e., deeper understanding of kid’s school work. Seeing spouse during workday.) | |||
Increase in child abuse / spouse abuse | |||
More attention is paid to elderly family members than under normal circumstances |
| ||
Dating | Seeing someone in-person during a quarantine becomes a sign of the level of commitment in the relationship | Culture shifts around non-hetero/non-monogamy, as dating and relationships move to the privacy of digital connection versus in public | Dating apps evolve to include video date add-ons, guided conversations, other virtual relationship-building |
Less cheating (at least in-person cheating or one-night stands) | |||
Less dating overall as there are less opportunities to meet in-person. | Decline in “hookup” culture |
| |
Home | Innovation in “home storage” industry | More competition in home storage industry | |
Work from home:
|
|
| |
Home heating and cooling bills are higher because people are home all of the time | |||
More people begin to grow food in home gardens. | Seed shortages. People buy gardening tools. | ||
People desire larger homes as they spend more time there, and may want a dedicated home office | People move out of cities | ||
Physical Health | Exercise | Increase in obesity: Some people are less fit because they lost their gym membership and routine that it took them probably years to develop | |
Decrease in obesity: Some people are more fit because they have more time to exercise. | |||
Increase sales of home exercise equipment:
| Gyms go out of business as customers who have been exercising at home during lockdown, or given up exercise, don’t renew memberships | ||
Innovation in the home exercise industry |
| ||
People put off elective surgeries and treatments | Certain hospitals that haven’t been impacted by Coronavirus having less demand as people avoid hospitals. | ||
People hoard drugs that are purported to work (e.g., hydroxychloroquine) | There is a shortage of specific drugs, which then impacts patients who depend on that drug (e.g., Lupus patients depend on hydroxychloroquine) | ||
People lose access to/can’t afford actual healthcare. | Alternative/folk therapies explode | ||
People feel more anxious and don’t have in-person gathering as a coping mechanism. |
| ||
Fewer children are getting normal vaccinations | |||
People catch up on sleep | |||
People eat more due to more time spent at home / less routine |
| ||
Funerals | Loved ones can’t have in-person funerals for those who pass away | Virtual funerals [1] | |
Not enough capacity to bury and cremate those who pass away in a timely manner | Mass graves | ||
Change of human behaviour— not needing a funeral? | |||
Religion | Increase in religious participation (often increases in times of chaos) OR Decrease: in-person community is a major reason for participation | Increase in sales of Bible, Quran, and other religious texts | Virtual religious communities |
Pets | People spend more time with pets |
|
|
Pets are surrendered because people have trouble paying for their food | Shelters are overwhelmed | ||
Increase in adoption rates, as people are now home to train dogs? | Virtual dog training | ||
Neighbors loan dogs to each other in order to be allowed to be outside of their home and get a breath of fresh air (for areas where you aren’t allowed to leave home unless it is for essentials or walking their dog) | |||
Geography | Virus spreads faster in cities. | Cities become less popular. Suburbs and rural become more popular | Purchase real estate in suburban areas |
Cities have more social unrest. | Increase in real estate demand in “lifestyle geographies” | ||
Decrease in local geographic network effects (ie - Silicon Valley) | Increase in demand for stable, high-grade internet. | ||
Pent up demand for travel and social experiences | |||
Viruses typically enter countries through major cities | |||
People get used to working and living at home, so location becomes less important. | Growing ease of informal, ad-hoc global collaborations (esp. In face of poor gov response) | ||
Time | Increase in content consumption and gaming |
| Streaming TV providers have higher retention rates.
AR/VR to replicate sports and outdoor recreation |
People pursue hobbies more |
|
| |
Money | Many people have less money and start putting off all of their bills
|
|
|
Bankruptcy of highly leveraged businesses |
| ||
People reduce discretionary expenses |
|
| |
Increased usage of wireless payment methods (e.g., Apple Pay) | |||
Shopping both online and offline is difficult. Offline leads to lines and risk of infection. Online has more items out of stock and deliveries taking longer. |
| ||
Decreased usage of cash | |||
Everyday people lose jobs and need income fast | See government policy section below | ||
Mental | Improvement because people are relaxing and getting more sleep and gratitude for what they do have and realization of what’s important | ||
Stress and anxiety every time you go out because you might catch it. Stress and anxiety of being cooped up with people all day (especially if you are an introvert). Stress from uncertainty and/or losing income or loved ones. | |||
People who already live alone feel more lonely |
| More personal development online workshops | |
People miss face-to-face interactions | Rise of niche online communities | ||
Depression because of joblessness | Increased use of drugs and alcohol | ||
More attention being paid to mental health, de-stigmatization of loneliness, depression and anxiety |
| ||
Therapies move online | Sites like Betterhelp.com grow |
Business
Category | Second-order Impact | Third-order Impact | Opportunities |
Manufacturing & Supply Chains | Dramatic reduction in just-in-time inventory practices | Complex goods (electronics) rise in price | |
Certain factories are closed or have less demand | Missing component can halt an entire supply chain | Shortages of certain products | |
Certain products suddenly have huge-demand | Digital
Consumer
Health
|
| |
Increased usage of robots and automation (avoid integrating humans who could be infected) | |||
Development of alternative supply sources outside of China | Trend toward insourcing and proximity-based manufacturing | Costs of many goods increases | |
Deliveries | Growth of grocery delivery |
| |
Growth of farm-to-home delivery and farm-to-trunk delivery | |||
Growth of Amazon | Amazon becomes more of a target for not having a safe enough working environment or not compensating workers enough for “hazard pay” | ||
Growth of Ubereats / Grubhub / etc. | Growth of usage of plastic containers | ||
Consumer | Increase sale of lysol and wipes | Increase sale of moisturizers because people have dry hands | |
A generation of kids with low immunity due to all the hand washing and sanitizing | |||
More resistant strains of viruses evolve | |||
Less communicable disease infection in the short-term because people are more sanitary | |||
Increase in staycations (vacations that are driving distance away) | Increase usage of RV parks | Increase in RV Services (Repair, Rehab, Furnishings, Service) | |
|
|
| |
Many people who avoided technology take more time to understand it better | |||
Fewer “wet” markets (animals/perishables) | |||
Fashion | People care less about their appearance that isn’t on camera | Less fashion purchases:
|
|
Fewer haircuts | |||
Wearing masks in public if sick will be regarded as a politeness like in Japan |
|
| |
New fashion styles emerge |
| ||
Events | No more one-on-one meetings |
| |
No more in-person events / gatherings |
| ||
Entertainment | Boom in esports | ||
New movies premiere in homes, not just theaters |
| ||
Increased interest in linear broadcasts (live streams and curated content broadcasts) | Creators from multiple verticals experiment with live streams and linear broadcasts (IPTV) that are digital-first | Services around being able to manage linear streams will be an opportunity for many to capitalize - content, tech, production, etc. | |
Entrepreneurship | Companies that are promote too much or too hard are criticized |
| Teaching companies how to do corona-virus sensitive marketing. |
Increasing interest in business opportunities that are less impacted by pandemics |
| Shorter interview periods, greater use of trial periods, starter projects and contract work | |
Travel | Increase of healthy testing at airports and other places | Increase of smart devices that track in real-time | |
Travel insurance price increase | |||
Air travel decreases | |||
Energy | Less demand for gas | Lower price of gas | |
Low oil prices |
| ||
More energy consumed at home | Alternative energy demand for home increase | ||
Retail | Small retailers stop paying rent | Malls get decimated | |
A large percentage of retailers go out of business. (Owners don’t feel like fighting. Business was already in a precarious position. Not enough demand. Too much debt) |
| ||
Self checkout becomes more common | |||
Amazon’s checkout product where people don’t have to even do a checkout goes mainstream | |||
Insurance | Certain premiums skyrocket - others plummet - personal auto drops due to 75%+ drop in personal auto claims | Cost of doing business increases for some:
| |
Demand for pandemic insurance | Government creates a complement to TRIA | Creates path for national insurance programs | |
Insurance companies become responsible for helping customers deal with pandemics | Loss control expands to deal with pandemics - new companies - new skills required for actuaries | ||
Event insurance no longer offered | Harder to finance large events | Fewer large scale events (SXSW) | |
Work | Older people disproportionately impacted | Senior position in companies and organizations open up | Create a way to capture institutional knowledge |
Dramatic decrease in popularity of open office environments | |||
People with disabilities find it easier to participate in the workforce | |||
Workplaces become more flexible with childcare policies | Office buildings become more vacant |
| |
Lack of in-person meetings decrease dealmaking around complex and trust-driven transactions (M&A in particular) | |||
Working from home dramatically increases even after virus |
| ||
Real Estate | Office space demand plummets as companies realize the amount of people that can work from home + recession | Cyclical demand changes for awhile companies waiting for freefall to stop before addressing their staffing needs | Properties will need to be “bio-safe” - early adapters to this will retenant more quickly |
Open-floor plans become less popular | Co-working spaces offer more personal offices. | ||
More real-estate is needed per per workspace | Demand in sectors of commercial real estate where working from home is not an option increases. | ||
Many hotels go out of business | Even after air travel resumes, there is large amounts of vacancy with limited travel | Adaptive reuse of properties such as affordable housing & student housing and health care pop ups | |
Employment | Immediate layoffs and furlough of employees |
| Charity impact Pawnshop business Loan Sharks Apartments |
Employees seen as liability in crisis | Further increase in contract workers, temps, outsourcing | Providers of contract and temps workers or those that facilitate outsourcing |
Investing
Category | Second-order Impact | Third-order Impact | Opportunities |
Stock Market | Backlash at public companies that seek bailouts |
|
|
Companies conserve cash |
|
| |
Looking for scapegoats leads to attacks on major hedge funds |
|
| |
New financial instruments created to profit from pandemics | Pandemic ETFs, ETNs | ||
Flight to safe haven assets | Return of gold Bitcoin gets more legitimized | ||
Unstainable levels of corporate debt. | Downgrades & inability to raise more capital leads to inability to continue share buybacks leads to loss of a major driver of broad stock market appreciation. | Active investment management is optimal for identifying value and managing risk effectively. | |
As a period of financial engineering comes to an end actual engineering becomes key to creating value. | Merit based business models that can harness true innovation in key economic sectors outperforms & sees increased flow of capital. Process innovation takes over the quest for novel innovation. | Opportunity and value can be found around the edges of things in more mundane sectors that solve key problems for the majority as opposed to enabling us to simply consume in increased leisure. | |
Education
Category | Second-order Impact | Third-order Impact | Opportunities |
Online learning |
|
|
|
Most people work as specialists but are repressed polymaths - they have little free time/energy to explore diverse interests. Many will use their new free time to become generalists. | |||
Homeschooling increases. Parents realize that online learning can work under the right conditions and with the right resources. | This new education paradigm:
|
| |
Low income students without Internet or computer have trouble accessing the Internet | Community hubs develop as a place for low-income students to access learning infrastructure. |
| |
Increased learning divide based on financial class | Rich parents can afford access to the best online teachers. | ||
Rise of homeschooling |
|
|
|
Teachers scramble to figure out teaching online |
| ||
Family Budget for Education Decreases |
|
Government
Category | Second-order Impact | Third-order Impact | Opportunities |
Government | Many of the issues that were the top issues suddenly fade into the background and make little progress in legislative bodies | ||
Universal basic income | Current and future presidential candidates run a platform of UBI | ||
Super profitable businesses will be taxed at a higher level in order to make up deficits | Companies will be valued lower | ||
Loans to businesses | |||
Fed cuts rates | Less ability to act in a future crisis | ||
Tax holiday | Tax revenue plummets | Increased government debt at a national, state, and local level | |
Tax revenue plummets |
| ||
Realization that eating too much sugar and smoking make populations more susceptible to pandemics | More sin taxes, stigmas, or pressure to reduce unhealthy behavior | ||
Creation of a nationalized insurance program (similar to TRIA for terrorism) | |||
Creation of a large public works initiative started to repair and rebuild roads, bridges, and tunnels in order to put people to work and to take advantage of fewer cars being on the road. | |||
Public transit loses appeal in emerging cities like Austin and Denver | |||
Citizens accept less freedom (movement) and privacy (movements, health data) in order to combat the spread of the virus | Some govts retain these “war time” powers after the crisis (like the Patriot Act) | ||
Company bailouts | New laws try to prevent bailouts -- create huge cash balances | Large sums of money in-efficiently allocated | |
New Taxes | Taxes on commercial insurance products to pay for pandemics (similar to terrorism) Industry specific taxes to fund bailouts - which will become acceptable BAU (similar to China) | ||
Huge investment in resources to tackle future pandemics. | Humanity is “vaccinated” against even-more-lethal pathogens in the future |
| |
Government prints money | Inflation increases |
| |
Government relaxes regulatory requirements and speed-up approval processes for startups and technologies that are needed urgently. For example FDA approvals for MedTech startups working on vaccines | |||
Governments engages startups, innovators, and tech communities seeking help in areas such as modeling, data analytics |
| ||
Military | The virus causes aircraft carriers to dock |
| - Broader use of drones |
Government Structure | Government(s) mishandles crisis |
| |
Elections have fewer voters | Strong push for mail-in ballots | ||
Handling of the pandemic becomes the major issue in political elections | More awareness drawn to health initiatives. | ||
Authoritarian governments are more successful at flattening the curve | More authoritarian policies become more palatable. | ||
Policies that would have previously been considered socialist bail countries out | Socialism becomes more widely accepted | ||
E-Government model (Akin to the setup in Estonia) becomes prevalent at all levels to ensure functionality in times of crisis and for government to have increased visibility and control of data for analysis via AI big data solutions. | This raises productivity and creates savings from the operation of government. It will ensure a broader and simpler ability to vote that may eventually lead to representative democracy akin to the Swiss model. It will also bring questions of data privacy, rights and security. Big government may bring Big Brother along with it. | Innovation in software solutions and secure cloud offerings as well as broader cyber security solutions will be crucial. Entrepreneurs and investors in these areas will do well. |
Others
Category | Second-order Impact | Third-order Impact | Opportunities |
Climate | Reduction in CO2 emissions |
|
|
Driver Safety |
| Fewer car accidents |
|
Food | Risk of infection at grocery stores | More people raising chickens | |
More people making their own bread |
| ||
More people cooking | |||
Increase in gardening | |||
More online shopping | |||
Safety | More ammo and gun sales | ||
More people are desperate to make ends meet | Crime rate increases | ||
Because police force gets infected is overwhelmed, its stops pursuing non-violent crime | Crime rate increases | ||
People with low incomes will be hardest-hit by social-distancing measures, and most likely to have the chronic health conditions that increase their risk of severe infections. | |||
Culture Change | People become more sensitive to large, but rare risks in their lives | Growth of certain insurance markets in the future | |
Generational conflict |
| An opportunity for collective (and understanding of the lag effect and irreversible change of exponential change) will emerges, which enables demand for carbon pricing to fairly allocate change | |
Increased nationalism | |||
Many healthcare workers risk their lives going to work everyday and also become burned out. | Celebration of healthcare workers | ||
New words created |
| ||
Hugs, handshakes, and cheek kissing become less common as a social norm | New distance greeting innovations - e.g. the “Corona (Elbow) Bump” or “Wuhan Shake” [1] | ||
Decrease in smoking behavior and increased stigmatization of smoking | |||
China criticized by US government for “wet” markets and hiding information at the beginning of pandemic | |||
Volunteering | Creation of a Peace Corps equivalent (“Immune Corps”) for volunteering at hospitals during times of need (i.e. the new “Candy Stripers”) |
Technology
Category | Second-order Impact | Third-order Impact | Opportunities |
Technology | Companies rush to create vaccines and treatments for Coronavirus |
| |
Companies rush to create cheap, scalable continuous testing solutions | |||
The pandemic exposes areas of the economy and life that can benefit from automation technology especially in crisis | Labour and employment less likely to go back to original levels |
| |
Appendix: Top 100 Fastest Growing & Declining Categories in E-commerce
March 2020 vs March 2019
Stackline reviewed E-commerce sales across the U.S. and compiled the amazing list below. Stackline is a retail intelligence and software company. Their software helps thousands of the world’s largest brands manage and grow their e-commerce businesses
