This Week in Startups - E1038: News Roundtable! Index Ventures’ Sarah Cannon & TechCrunch’s Alex Wilhelm on COVID-19’s impact so far: lessons learned, Sarah’s stimulus plan, endgame scenarios & more

Episode Date: March 21, 2020

1:04 Jason intros Alex Wilhelm & Sarah Cannon 5:00 COVID-19: Where are we now? 10:12 Have would Obama have handled this situation? What are the proper next steps? 15:29 Sarah lays out her economic stimulus plan 20:29 How much has the political landscape changed over the last few months? 22:08 How would a stimulus plan work in practice? 24:36 What will change about the gig economy and healthcare coverage? 28:35 Will the average American citizen's perspective on the world change? 33:23 Alex shares his thoughts on the media's handling of COVID-19, and what Twitter's role has been during the crisis 45:09 Jason's theory on what we should do differently next time around, and it is applicable in America? 50:08 What is the endgame of COVID-19? How long will it last and how bad will it get? 1:00:42 Chances of civil unrest/chaos? Are testing incentives the best way to bend the curve? 1:10:14 Thoughts on WeWork/SoftBank news & why Sarah didn't invest 1:13:22 How Sarah is advising her portfolio companies during COVID-19, benefits of overcapitalization 1:18:42 Durability of SaaS revenue during a recession

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Silicon Valley Bank Ideas Bank here Hey everybody, welcome to this week in startups it's Friday, March 20th, 2020 and for those of you watching this in 100 years, we are right in the middle of the coronavirus panic. It's in full

chaos mode, I think, here in the country. People are very scared. We have a lot of people being tested at this moment and we have a lot of shutdowns cities and people being told to shelter in place, a pretty basic term that doesn't exactly mean quarantine. And so today on the program, we want to talk about tech, but we're obviously

going to be talking about business as well through the lens of this tragedy. And it's important to note it is a human tragedy. People are dying in large numbers, sadly, in certain countries. And then in other countries, it's smooth selling and people are back to work. So it's a very confusing time and talking about business in a confusing time like this. Sometimes people feel it's maybe callous or inappropriate. But the truth is what we're going through right now is going to have a second and third order impact and the economy is obviously the second one. And we've had a large number of people filing for unemployment already. And there's some major concerns that the financial system has been freezing up. We've had stock market freezes

on trading and different circuit breakers going off. And people are scared. And the financial ramifications of this are arguably going to cause more pain and suffering, according to many people who are very smart than the disease itself, which if quarantined properly and if we take the overreaction strategy, could be very mild and be less than the number of people dying from the flu. With that big preamble and disclaimer at the top, Alex Wilhelm is back with us on the program. Alex was at TechCrunch. Then he went to Crunch Base, and now he's back at TechCrunch. He does the Equity Podcast. The last time he was on was episode 969. He's really smart, plugged in, and opinionated.

Welcome back to the program, Alex. I mean, that's mostly true. I would recant the smart bit. I'll take the opinionated bit, but I think we can kind of vet that by the end of the program. And you've been a journalist for a decade now? Oh, my gosh. Yeah, give or take. plus or minus a year. It's been the only thing I've really done since my second year of college

and by far one of the biggest blessings in my life to get to do this whole time. And focused on tech and business specifically for the majority of that, all of that. 100% of it, actually. I mean, I try to focus in between the little bit between tech and money is where I like to sit. I find money fascinating. I find tech to be super interesting. And kind of the union of the two makes for a ton of really interesting stories, trends, people to talk to. It's my favorite niche and I'm really lucky that I get to write about it all the time. All right, and a new fan favorite for the pod. Sarah Cannon is with us.

She's a general partner at Index Ventures, and you saw her recently as the season four Angel podcast, premier guest. That's, I think, episode 32 of Angel. Welcome back to the pod, Sarah. Jason, thrilled to be reunited. And virtually, for people who are wondering if we're breaking some laws and the police are going to knock down the doors here in the studio, everybody is at home or in their office right now, correct?

speak for yourself, not breaking laws. Exactly. Did you get good feedback on being on the pod, I assume? Some people might have seen it. Yes. I was shocked by the amount of people who had seen it and knew far more. I don't have to introduce myself in meetings with founders anymore. They just tell me things about myself that I'm horrified.

Anybody knows. Yeah. And that is my unique ability is to get you comfortable during those first 50 minutes and then you spill the beans in the last 20. And much to the chagrin of a large number of people in the tech community, this podcast is watched by a lot of people. So let's get right into it. The numbers of the coronavirus COVID-19 are,

seem to be doubling every, the confirmed cases here in the United States. And we're going to take a United States perspective to start since it's a U.S.-based podcast. The number of cases are doubling every couple of days probably as a function of the fact that we did no testing for the first two or three weeks, which was just unbelievable.

But that seems to be correcting now. over 13,000 cases. And testing, I heard some number of 10,000 tests in the last day or two in New York. Italy surpassed China, sadly, in terms of death toll, almost 6,000 people have died. 500 a day, I think, the last day or two. It seemed to have plateaued at 300. The worldwide stats, a quarter million cases, 90,000 recovered and just over 10,000 dead. Something amazing seems to be happening in China.

We're not sure if we can actually trust the numbers out of China. There's been a lot of discussion about that. But China, Singapore, South Korea seem to be back to business as almost normal. Same with Japan. The Dow has been whipping up and down. It's based on your work. I know you were inside the Obama administration. What's your thought generally on where we're at with this crisis, obviously you're not on because of your medical expertise.

But where do you think we are in terms of understanding? what to do, and then we'll get into the business case here and what we should do in terms of getting out of this economic tailspin. Yeah. Well, first of all, thank you for having me. I mean, it's most of all a human tragedy. And I think, you know, we have to acknowledge that first. I mean, you know, amidst the facts and figures on the stock market, 10,000 people dying. And we know that's the beginning of the curve is terrifying. I mean, I think it's the most, the time of the most uncertainties since I've been alive. And as you mentioned, there's the health impacts

and then all the economic impacts. You had asked me, you know, where are we in terms of understanding? I think an interesting thing is we have examples, right? Like it's very rare that you have a natural experiment, but we have, we can look at different countries, right? So we can look at China and South Korea and how they've responded and their curves

versus the U.S. and a lot of European countries. Even within Europe, we have natural experiments of Germany and how they've responded relative to France in the UK. So I think, you know, we are starting to get real-time examples of what the trajectory of the curve looks like, unfortunately, what the fatality rates are, and then what are the consequences of different levels of government action? And the key takeaway that I've had is, you know, as you said, Jason, testing upfront is the most important thing we can do. We haven't done that. We kind of underreacted. And so now, how can we be thoughtful about catching up? But I think we have a lot to learn.

from other countries. Alex, what are your thoughts on the reaction of the United States, perhaps slow to start, but the impact it's going to have on business here and just what you're seeing in San Francisco. So I actually just moved out of San Francisco, Jason. So now, for the first time I'm on the East Coast, and I'm kind of looking at this now from an East Coast perspective, but I'll say in my town, if you're in Providence, which is not a tech hub, but it's kind of a university center out here on the East Coast, people are surprisingly doing a good job.

I'm seeing people closing down businesses, staying apart. Aside from the grocery store, people are keeping their distance. It's a very encouraging perspective from a local view that people in the U.S. care enough about each other to begin to really shudder economic activity, which will be painful to keep everyone safe. Now, on the national front, I think our response as a people, which just to say our government, has been pretty sad. But on individual case-by-case person-by-person basis, I'm relatively encouraged.

I hope that the mistakes that we make, are things that we don't make again, because this will not be the last time we're in this situation. I hope that we build strong muscles and as a government and a country to avoid the mistakes we made. But, you know, I wish I was on in two weeks so we could talk about things getting better, maybe, but instead we're here kind of one of the scarier moments of the country. I think cases went from like, you know, like seven to 15,000 yesterday, something crazy like that. So we're at one of the scariest bits, but I'm hopeful and I'm always going to be bullish on America. Yeah. And when you look at the fear, it feels like this was the week of peak fear. I get the sense that now

people, we're very adaptive creatures, the human spirit, it feels like, and the humans, that is, and the human spirit's pretty darn strong in crises. So it feels to me, Sarah, like people have now accepted the reality of working from home, staying at home, not being able to go to the club, not being able to go to the beach. But there seems to be, this is all very local and bottom up. People opted into staying home or taking their kids out of school two weeks ago. Then San Francisco, Los Angeles, New York, and then California, but still no national sort of edict to stay home. And having worked for Obama, if Obama was president right now, do you think he would have just immediately said this is going to be a national stay at home kind of

situation as opposed to Trump's reaction, which is let the governors and the cities make the decision, which to me, and this may sound cynical, it sounded like he didn't want to take a leadership position maybe on a CYA basis. What do your thoughts, Sarah? Most of all, I hear that you're really sad you can't go to the club. That's what I took away from that question. I had four reservations, plenty of bottles ready to be popped, and sadly, I'm home. Well, when I'm let out, I know how I'm calling. In response to what Obama would have done, I certainly do think when watching him work in times of crisis, and we were. I mean, when I worked for him and we were in the West Wing, it was the last, it was during the Great Recession. So I do think he would have responded more swiftly on a federal level.

We saw him do that on a lot of things on the economic side, through TARP, on the auto bailout. I mean, he wasn't wanted to do that on climate change, on immigration, wasn't afraid to take kind of federal steps for. kind of dramatic measures when we needed them. So yes, I think it would have been a more top-down approach. Should we have just done and should we still do a national quarantine? I mean, if you were in charge, Sarah, if you were advising the president, what would you advise them? Because this seems pretty crazy to me that Florida is out and about and New York and L.A. and San Francisco are in the Bay Area or locked down. Given what we know now, I would absolutely advise the president to do a quarantine nationwide because so much of pulling the costs, I mean,

staying home forward provides so many benefits down the line and we know that's true. So yes, that would be my advice. Alex, what are your thoughts on that same question? I just can't get out of my mind the tweet from Michael Dell about the video of the guys in Florida who are partying. They're like, if I get the Corona, I get the Corona, whatever. I'm not going to stop partying. And he was like, don't apply at Dell or VMware. And I thought it was the best, like, old man, that I've seen so far in this entire crisis. No, but it's been in a really, really good way. I mean, I love seeing the resurgence of shame as a tool to enforce social behaviors that

are positive. I mean, we need to get people inside. And, you know, back to my point, the people trying their best, I think that people are doing a good job. But until we do have a national quarantine, people will not stop working. What we need to do is freeze rent for everybody, ban evictions, shut the country down for two, three, four weeks, and make a national sacrifice to pull this off. but we're not going to do that because

to editorialize a little bit, I believe the president is worried about the stock market and re-election more than he is about the health and safety of the nation and its people. And so we're in a place where we have the exact wrong person at the wrong time. We have an illiterate narcissist when we need to have a literate person of empathy.

So it's concerning to me. And I don't want to turn this into an anti-Trump show because people will complain in my tweets. I don't need that. But certainly, even if you're a Trump fan, this is not probably his finest moment, even for you. So I'm disappointed and excited about maybe some national change and maybe 12 months or so.

All right. When we get back from this quick break, I want to talk about what stimulus we think should be deployed to deal with the fact that we're going to lose at least a month to three months of serious economic activity. And Sarah, I think you have some thoughts on this when we get back on this weekend service. You crazy about efficiency like I am? Is your team drowning in emails? Are they missing messages and leaving? your customers wanting more? Well, are you managing all of these through single-player mode?

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for more information. Thanks again to Front for supporting our company with great software and for supporting the podcast. Let's get back to this amazing episode. Well, welcome back to this week and startup. Sarah Cannon and Alex Wilhelm are with us. Senior Editor at TechCrunch, General Partner Index Ventures. Sarah, what do you

think on a stimulus basis? We, you know, obviously, and this will be the third disclaimer of the show, this is a human tragedy, people are dying. When the economy crashes, people also die and we see suicide. We see opioid addiction. We saw so much pain and suffering. And yes, even death after the financial crisis and after the dot-com bust in 9-11. This is very real. People do die as a second order of fact. What do you think we should be doing on a stimulus basis here? We should absolutely be putting together an extremely strong stimulus package. But you want the medicine to fit the disease.

And fundamentally, I mean, people keep comparing this to the Great Recession and they're extremely different. How so? This is a health crisis that has economic consequences that we want to mitigate with economic measures. But the fundamental underlying problem is a health problem, is a medical problem. Whereas in the financial crisis and the recession that we had 10 years ago, it was structural challenges in the banking institutions and in a lot of sovereign debt challenges we had across the world. So fundamental structural problems. Now the structural, the economy is much, much stronger on a fundamentals basis, and it's a medical crisis. So the first thing we have to do is, as we've said, kind of test people, incentivize everybody in the world to develop a vaccine,

get those things to people as quickly as we can, and come with all kinds of traditional, untraditional measures. We can talk about the reserves and how we should use gas stations, I think we can be very creative in addressing the actual spread of the disease and being able to treat people that have it and save their lives. So that's a medical piece. On the economic side, I'm so grateful that you gave me the opportunity to be economic advisor for a few minutes. I think there are things I would do with the individual, the business, and the macroeconomic level. Individual level, most importantly, I would give people paid sick leave. So even if we have a lockdown and we're allowing groceries and pharmacies and essentially,

essential businesses to be open. I don't want people who are sick and need the money to go in and do those jobs and get other people sick. So, I mean, we should have paid sick leave all the time, but I'll restrain myself. So now we should absolutely have that. We should have unlimited sick leave. Uncapped, unlimited, basically. Well, I'd say, you know, we can also two or three weeks, right, if you're sick and we know, we know the period under which you're contagious, exactly. So that's most obvious. Then I would give people a cash transfer, right? So you need money. And, you need money. if you can't work right now, you're a lift driver, and you can't drive because there's no demand, we give you money so you don't miss rents, you can feed your family. The government gives you a

direct check. Absolutely. We've done this before. We did this in the Great Recession. I think I got $700, and this is Bush's idea. And, you know, we should do that, not just one off, but like until the unemployment rate increases. So we should have, these are called automatic stabilizers, but we should have them until we have, you know, people are back at work. This would be unemployment. in a way, or you see it as being somehow different than unemployment. Is it free money to everybody so we get the economy going, or is it replacing people's lost wages? I want to get the money in poor people's pockets as fast as I can. And unemployment insurance, I worked on this back in the day, like has a whole series of requirements

that it takes to get the checks to people. So if we need to do emergency measures to get people checks faster, unemployment insurance, you're supposed to be looking for a job. You need to prove that. I think we should make an exemption to that right now. So I would do real cash in pockets. And then for businesses, I mean, bottom up, I'm not worried about the banks and I'm worried about the local grocer and, you know, people who, the shoe repair person and these people in a matter of, they have enough cash to cover days. So they're shut down for a week and they're out of business.

So no taxes for them. And I would also give them, the small business administration should give them loans with no interest. because again, I think if we do this right and we're strong enough about it, it should be short. So, like, I would say, like, expensive, aggressive measures in the near term to save us if we don't and we muddle through this, it's going to go on through the fall and next year and that's going to be way more. So you're thinking a three to six month just here is a massive pile of cash in very small doses to a large number of people.

People, small businesses. Yeah. And I think you should set it up. So you actually have. triggers. So we're not litigating in Congress about when this ends, but we just say when unemployment is at 4 percent, these, you know, this cash transfer stops. So basically we're going to do a big UBI experiment. And it seems like the public feels pretty good about this. And I think, again, a lot of this goes back to politics because it's the lens in which a lot of these regulations happen,

but I'll bring Alex into the discussion here for a moment. This does seem to give people like Andrew Yang, Sam Altman at Y Combinator, and other folks who were very early into UBI. They deserve a bit of credit here for, I think, acclimating the public to this concept of free money. Yeah, yeah. I don't think we've fully digested how much the American political landscape has changed in the last 18 months. When we think about how far left in the American context, the Democrats have gone on health care, to how we're talking about kind of mass-based UBI transfers under a GOP. administration. I think that's interesting. I know Bush did it back in the day, but the GOP has changed

a lot since that time. And so I think there's been a refocusing of the American political lens writ large, and I think we're seeing this now because we're going to probably get some form of automatic cash transfers through Mitch McConnell in the Senate. And if you had told me that six months ago, I would have asked how much acid you'd had and if I could probably borrow some. So this is just not something I saw coming. But I think the reason why it's going to happen is the scale of the economic carnage that's coming is enormous. And I pull up some Goldman Sachs data from this morning. They're expecting a quarter on quarter basis in Q2 negative 24% growth in the country. I mean, that's a number that doesn't actually compute in my head because it's so large. And it's also, if you had asked me a week ago,

I would have said 10% if I was being a pessimist. 24% is catastrophe. This is world, this is at least local economically ending. So back to Sarah's point about what we need to do, I would love to put her in charge of this right now because that all sounded perfect. So let's just vote for her, I guess. Yeah. Sarah, give me an idea of how you get the money technically to, let's just say, 100 million Americans. Do you look at their taxes from last year and say, hey, if you filed for $50,000 in, you know, income or less last year, just you're going to, we just email that person who had $50,000 or income or below and they filed an income statement. We just send them $2,000 or something like that. So, you're going to check.

It would be through the IRS. And again, we've done this before. So we have your name, we know, and we just, it's through the mail, you open it. I mean, you're talking about should we means test it? Like, should everybody get it or should just people whose income is under a certain level? You and I have discussed this before. Received this. I wanted to be fast.

So if people who are wealthier receive it, I care less, honestly, then it. So I don't know exactly the time. So you could even say everybody who filed taxes last year just gets a $2,000. check, that would be $100 million in change, I think, in terms of people. And so we're just sending that money right out. Yep. Immediately. Pretty trivial.

And it would be $200 billion or something like that if it was $2,000 on a hundred million people. So they're talking about $3 trillion in total stimulus seems pretty easy to do. And if you're an affluent, rich person, you could just not cash it. Or if you do cash it, you could just give bigger tips for a month. Yeah. Yeah. We could set up kind of a social campaign to if you make over 200k a year or pick a number,

you should probably give this away or go spend it in your local community. Go drop $100 tips on people. I mean, just down the street from my house, restaurants are trying super hard to stay open a little bit so they can keep some cash flow going so they can keep paying their rent so they don't shut down. It's embarrassing that in the richest country in the world, this is where we're at. But if we did give rich people some more money by accident in the name of moving quickly, one, I don't actually care. And two, we can shame them into using it well.

So it's just, it's not that big of a risk if some rich people get a little bit more money. If it helps people who need it now, get it. The best idea I heard was there was a restaurant selling quote unquote bonds. So they were saying, give us $75 now. We'll give you $100 food credit later. And I actually had this idea for a business like a decade ago. And I got the domain named Kokua, which means to help in Hawaii in K-O-KU-A. And I thought, wow, if you helped somebody by buying their future products,

similar to Kickstarter, but it would just be a financial arrangement. You'd get around those accreditation laws. What do you think will change about the gig economy, if anything, because of this? So probably not enough is my first thought. I mean, I've been keeping moderately close tabs on this, so I'm not going to say that I know everything that's going on. But there have been some movements by some companies, Uber especially, I think, to talk about paying some people if they have this infection to stay home for two weeks,

as a way to protect both their user base and their drivers. But a couple of weeks to pay for a fraction of the Uber driving population isn't enough. I think that what we've seen as a nation in this moment is that the tying of benefits to employment is fundamentally broken. And it has never been a system that's worked. And I think we're now seeing kind of as a people at once how poorly it does work. So I think this should be a moment to call for kind of national reform of how we handle health care and other services. happens to be at the same time we're talking about Medicare for all. Maybe those two come together.

But I just hope we don't waste the moment. Medicare for all or health care for all, is there a difference between those two things or is it just a... Hmm. That's a... So if you're a Bernie Sanders fan, and I get this wrong, please don't tweet me. Please. Bernie bros.

Just leave... Not even Bernie brothers. Just please leave me alone. I don't care of Bernie. He's not going to win the nomination. I moved on. By the Twitter handles at Alex's first name only. And that's why Jason's popular right there.

He controls his audience. Get in there. Get in there, fuck. So the way that I think about Medicare for all, and this might be different than people's conception, is that it allows anyone to sign up for Medicare, which means that it opens up the fence. So people can come in and use the service. Now, this could be done in a way that you pay a small premium. It could be a public option.

There's a number of ways to go about this, but Medicare is efficient. We know it has very low overhead compared to its payouts. It has negotiated rates around the country. And it's a system that keeps people healthy. I think it should be available to everyone who doesn't have health insurance for a nominal fee and should be built into our tax code. That's my view of that. Sarah, of course, knows better than a government policy better than I do, so she can weigh in. But that's how I think about it. Yeah. Sarah, what do you think? Is this going to change how we look at health care? And I think thinking about the, this would be, I think you put this into the third order, you know, impact first order, people dying, people getting sick, second order, the economy, third order, just maybe how we think about the world differently. How will we look at post this crisis? We assume we get through it. like Singapore or South Korea and perhaps China, if they're not lying, how they get through it,

what will it look like and how will we look at the world differently and answer that question when we get back on this being started. It's been a little tough for startups right now. We all know that. And Zendesk is trying to be super helpful during this time. Many of us have had our minds distracted. There's a lot going on. But now more than ever, it's important to build and maintain great customer relationships.

You know that in a crisis. You're going to want to work with your customers. And Zendesk is here to help with Zendesk for startups, a great program that they run where they give qualified companies six months of free usage for their service-first CRM solutions. They also give you access to their exclusive startup community and resources to help you scale and grow your customer support team. They are rolling out tons of new features like the support suite and the sales suite. You've probably heard about those. and if you're an early stage startup to find as under 50 employees, you can get started today with six free months of Zendesk at Zendesk.com slash twist. It's a really amazing offer.

I really appreciate them doing it. If you're a startup with under 50 employees, you're probably doing pretty good. But you may not have set up your customer service. You may not have set up your sales. And you need to do that now. And it's a great time to do it. Zendesk.com slash twist. Every customer counts when you're in a startup, especially now.

So start right now building out the best. experience with Zendesk. Thanks again to Zendesk for making this offer to our family of startups. Great job. Okay, let's get back to this amazing episode. If you guys could only hear what we talk about during the commercials, I mean, literally, I would be canceled for the 14th time. Can't cancel me people. You've seen my tweets. Whatever, this is the thing. You know, you try to parody me. There's been 15 parody accounts in a decade, and none of them are as ridiculous as at Jason. Before we went to the break, Sarah, wanted to know what you'd think the third order, how we look at the world, our perspective as a country, let's have this

be America for now, America Focus. We can talk internationally if you like. How will Americans look at healthcare, gig economy, personal hygiene and space and maybe even our government and the media? What do you think the big changes are going to be in the average Americans perspective of the world? Post-crisis. The silver lining of this crisis, I think, and I don't think there's much to be optimistic about right now. But I do think it will restore people's faith in the government and in other people. So I think a number of, I really do. That was the first thing that I thought.

Is there anything good about this? And I was like, well, it will show people why we have government and we have to invest in institutions and in our communities. because I'll start on the government side. I really think, especially in Silicon Valley, where there are a lot of libertarians, of which I am not one, a lot of people think I am gifted, founder, and I have this great idea,

and I'm going to bring this product to the world, which, you know, as a venture capitalist, I'm very supportive of that and always. But at the same time, you're able to start a business because there are roads, there are schools that educate the people that work for you. There's a government that protects you

for your security. there's some really essential things that are provided. And I think it's very easy to forget that. And I think the prevalence of technology has actually led to kind of atomizing our societies, right? People spend more time by themselves at home connected to devices and not face-to-face. We're obviously not connected face-to-face. But I think moments like this remind you why you need collective measures, right? Why you need the reserves to come out and test people and why you need health care institutions

and the CDC to be funded because it might have to be ready in 24 hours to scale tests around the country. So I think that is the silver lining on the government side. So appreciation of the government and then preparedness seems like something that we seem to have forgotten. I mean, if you want to talk about being anti-fragile in the seams book or just, you know, having some basic redundancy, which is a different thing than anti-fragile. anti-fragilist systems that, if I define this correctly, a system that is stronger in times of uncertainty. And then just redundancy is like one thing breaks,

you have another. We don't even have the ability to make certain drugs in this country. We don't have the ability to make masks. The idea that we have to fire up a factory and make ventilators, you've got to call Elon Musk because he's the only person who's actually created a factory in the last 10 years in this goddamn country. Like Apple has no ability to make eye. phones in this country. And that's Apple with unlimited resources. They don't know what they're doing

in terms of making a goddamn factory. This is a national security concern if we can't build stuff, correct, Alex? Yes and no. I mean, I'm not going to say that I'm a globalist first, but I'm certainly appreciative of what globalization has done for the world economic system as a unit. And certainly Apple is pursuing the highest quality goods of the lowest possible price to pursue margin because that's what they're set up to do. They're set up to maximize cash flow. personally, without my economics hat on, I completely agree with you. I'm a little bit unsettled to realize how much of our pharmaceutical industry was based on supply chains that routed through China. I was not aware of that. I'm not going to lie, pharmaceutical supply chains, never thought about them before now.

But I bet you a dollar, or maybe in your case, Jason, you know, 500,000, whatever it is you bet in poker, that when this is over, we're going to forget these lessons that we're talking about. I agree with Sarah, we'll have a better view of government. I agree with that because it's going to be very much in our lives. But I bet you that Apple doesn't really materially move the bulk of their supply chains out of China. I bet Merck doesn't. I bet, you know, Pfizer doesn't. I bet the smaller biotechs also don't. The economic incentives are still there.

And I also bet you that China's going to put a lot of money to work to ensure that it stays at the center of the world. I mean, we don't have a lot of collective will in this country to pursue large economic projects. I don't know if that's going to change, but certainly while I just come back on my political thing, Fox News is parodying one particular narrative that's fueled by certain people with certain political views. I don't see that changing. I think this is a really good jump-off point. Thank you for bringing up the media. It seems like people who were on Twitter who were watching the videos that had gone viral in January.

I remember distinctly the video of a person going through the hospital, bed to bed to bed, watching people die in real time on that one video. and then there was another video of people welding door shots and another video of people blowing some type of disinfected in the streets and like cannons. I saw that one. What's that? I saw that last one. I didn't see the first two.

I'm totally honest. Each of these had gone viral. We all became aware of this in January and February. And then if you look at what happened with Fox News, Alex, and the president in, and again, not to make this political, but I think on a media consumption, since you're a media person, spent your whole career in it, I'm interested. your thoughts on media diet. If you were on Twitter, you were debating this, you were aware of it.

And there's some really interesting discussion about, are you allowed to even discuss this if you're not an expert? Oh, my God, clutch my pearls. But people who were watching Fox in February and into March were hearing that this was a literal hoax. And it was a continuation of the Ukraine and Russian hoax. and now the same people are going to realize that listening to Fox could lead to grandma or grandpa

or somebody with lung disease dying because they went to a party. I mean, it's not like a joke, right? No, it's not a joke. Well, first of all, one, I'm a failed entrepreneur and then a journalist. Let's be super clear about my career path. I think that's pertinent to this show.

People want to know that I've faced playing in public. Great. Let me know your next idea. I've got to check here for you. No, that would be a terrible idea. But on the media diet point, I think we're seeing the limits of the usefulness of having the most popular cable news channel that has a large echo effect in American media, thinking that the president is always correct. And we've seen here that they echoed that until the president changed his tune. And then they rapidly pivoted like a 180 with zero shame.

Back to my point. I mean, how the hell can they be so hypocritical and not just go home and cry about what they're doing? What are your thoughts and even the left? Like we had that recode story where they basically said, Silicon Valley is handshaking, and that's what I meant by late stage journalism before when we're talking during the break. Late stage journalism to me is the phase of journalism we're in right now where it's journalists are picking aside and maybe they're being a little antagonistic with the tech

industry and maybe they're spinning stories to be, and this has always been the case in journalism, but it feels pretty acute right now that they're making the headlines for clicks. Like they've literally framed the coronavirus in recode and got called out on it in ahead of time. They anticipated it as like, we're obsessed about cleanliness and we just don't like handshakes. And boy, aren't Silicon Valley people weird. And they haven't even John Mia Copa for that. I think you're cherry picking to cherry picking. And so I think you've niched down to a single story.

And I saw the Twitter blow about this with Bilagia and all this. And I tried to avoid it because I have things to do. but I don't think that story is representative of journalism. I don't even think it's representative of the technology press. I've read probably a thousand stories on COVID-19 that came out of technology first media about what entrepreneurs are doing, how companies are reacting, how investors are behaving and performing and what they're up to.

And it's been pretty damn good. And so, yes, maybe we could have fucked up that story. I don't know. I didn't even read it because I just didn't want to get mad at people on Twitter because I'm learning to be mature. Got it. But I don't think that it. as representative. And so we could debate the nuance of that story.

If that got written under your publication, what would your reaction be? Would you, would you write like a, hey, how we got it wrong or how we, what we've learned from this? Because Recode hasn't. And I don't mean to call them out on it, but I do. I mean to call them out on it. I mean to call you. You do. I mean to. This is, this is something that you enjoy doing. I'll say why I'm personally aggrieved. Sure. Nine times out of 10 I get contacted by journalists today. It's we're doing this story about something horrible at one of your portfolio companies or something horrible in the world. Can you comment on something horrible in tech and why tech is horrible? And I'm like, I guess I can if you really need me to. But for the love of God, would you cover one of

these five companies that I invested in that's doing something interesting in the world? And they're like, yeah, no, we don't do that anymore. That's how I feel aggrieved. I don't see it. I mean, I know that there's a lot of venture capitalists who are currently very annoyed that after 10 years of very, very positive coverage, there are some negative stories out there. But I live and breathe this and I read tons of tech coverage and I write a lot of it. And even now, on the brink of a recession in which companies are going to get vaporized

that are series A, B, C, and D, most stories that I read are pretty positive and optimistic. I'm still covering venture rounds right now. Fewer, because there's fewer being announced, but I spend a lot of time talking to founders, talking to venture capitalists, figuring out what's going on and honestly caring about it because it's interesting.

I will also point out when things are not going well and that's when, oh, Alex, you wrote this negative story. Oh, I can't believe it. late stage journalism and people begin to melt down because they are accustomed to being treated as if they walk on water. And it turns out they're just people that make mistakes and have money. I like it better when you looked at us as Jesus. Sarah, it was a much better life when you guys put us on a pedestal. What does that make me like Mother Teresa? Absolutely. Absolutely. So what are your thoughts just on the role Twitter is playing in all of this and media

consumption and just discussing it. Obviously a little controversial, you know, Elon tweeted like we're overreacting. David Sacks has been talking about like, hey, does this quarantine and the damage it's going to do match the actual reality? And why aren't we talking about Klonokin and some of these other drugs that look like they're very positive? What do you think about people today talking about this, especially leaders, and debating and questioning what they're reading, because it does seem like the numbers are very funky and people are just trying to get a true north here and it doesn't add up. The numbers don't add up and the actions don't add up. People were in denial for three weeks in our government and now they're overreacting. It feels like

perhaps or maybe they're appropriate reacting. What do you think the role of Twitter plays and all of us debating it all day long there and trying to like solve. problems there. So I got to give a caveat, which is, Jason, I look up to you in many ways. Twitter most of all, I think I have, I don't know, like 100 followers and have tweeted probably definitely under 20 times. So this is not an area of expertise, but that doesn't stop me from having an opinion about it.

So I think Twitter is playing a very important role in our democracy. And in some ways, I think it's an antidote to what a lot of other media organizations are doing, right? Alex just gave a very thoughtful explanation about bias in some particular institutions. And then on Twitter, it's kind of the people's revolt to say, like, here's my view of the facts. And I mean, I think you want to talk about this later. But I also think there are examples of Twitter letting people connect that would not ordinarily connect to come up with solutions, creative solutions to this crisis. So by all means, more people, more connections, more creative ideas.

Which one are you talking about in terms of the connections to people collaborating? I was thinking specifically of Elon Musk, de Blasio and Nate Silver, and the kind of call out for like, here are the numbers. We don't have enough ventilators. And Elon saying, look, I'll get them. I'll make them. And I think, you know, to the positive stories, and I'm glad Alex is balanced in his reporting. And I actually think a lot of, I agree with him. I think a lot of tech reporting is balanced. But, you know, they're doing a lot of good things. And I think tech deserves a lot of criticism. You know, we've talked about that. But for Musk to say, I am repurposing my factories.

I'm imagining there's less demand for some of his other products. But, you know, to say, look, I'm going to build ventilators and help is to be celebrated. All right. I think smart. Oh, go ahead. Yeah, go ahead. Smart because he could use a PR win right now. He's been a little bit hot lately.

He's been a little bit messy. And so I think if he pivots to ventilators and does a lot of kind of national good, it would not only help Tesla's brand. It would also bring his PR some good vibes. So it's kind of a win, win, win, win. You know, we win, the government wins. Elon wins, Tesla shareholders win, do some good, Elon and just get it done. And then we'll all be very nice to you for like six months until you screw up again.

All right. We'll get back. Let's talk about all things Elon Musk and ventilators. And then also I think how Japan, and I have a theory, and I want to run it by you and get your feedback on what we'll learn to do differently and what actually could a way to manage this without shutting the economy down. I think I have a strategy when we get back on this week in startups. Silicon Valley Bank is built to help move bold ideas forward and faster for more than 35 years. Silicon Valley Bank has helped startups go from the seed stage to Series A and beyond. With that kind of experience, they know how fast the world of innovation can change.

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Silicon Valley Bank has solutions that will help support you from the seed stage all the way up to the big stage. Visit SVB.com forward slash twist TWIST. That's right. Silicon Valley Bank. Ideas. Bank here. Okay, let's get back to this amazing episode. Welcome back to this weekend. Startups, thanks to the sponsors, thanks to the team. Got a really hardworking team over here at launch. Everybody's working from home, but I see all those green lights on in Slack. I see everybody supporting founders. And this is the time, I think, on a leadership basis that you really get to see people's reputation. and, you know, I saw one accelerator pull $100,000 check from one of our portfolio companies. I may out them later today.

I'm not happy about it. And you can be sure that founder is telling everybody about your program and I'm telling everybody about your program to avoid you like the plague, to use a metaphor here that maybe isn't appropriate. But, man, you better live up to your, and I mean this for investors specifically. If you say you're going to do something, you better do it even if the crisis occurs. I, and with me today, Sarah Cannon, from a. Index Ventures, incredible venture capital firm, and she did a great job on her initial appearance on the pod, Angel episode 32. Got a like great feedback. Sarah brought the thunder. Really great guest. And I invited her to come back for the news roundtable. Alex Wilhelm is, you know, I don't need to even tell you, but he's over there at TechCrunch. And he's Alex on Twitter, loves to talk about whatever the hot topic is on Twitter all day long, Bernie Sanders, Trump. No.

it is, health care, any of that stuff, Supreme Court justices, his last appearance, episode 969. All right, let me put this up the flagpole, see if anybody salutes here. Let me see if I put this bread in the toaster if it gets brown. These are just dad metaphors. I do this all day long with my daughters. They do it all day long with my daughters.

They love it. They love my dad jokes. Best thing about a dad joke is, you know, they get better when you get to the 30th or 40th rep of them because people can anticipate them. So what we've learned here is that, and when we come out of this, and this may sound silly,

but Japan has avoided, and China appears to be avoiding this reemerging and they're controlling it because of radical, and I do mean radical differences in personal behavior and some societal behavior. If we all did the following, it seems that this disease would not spread and we would be able to go out in smaller groups. We would be able to go out, or let's say go to work with five or ten people in an office space. So one of them is washing of hands.

Pretty obvious, but this thing spreads because people don't wash their hands all that often. And people are now washing their hands 10 times a day. And that takes the coronavirus off your hands. People don't clean surfaces. Now people are getting alcohol wipes. everybody's got the right wipes on their desk, they're cleaning them. I've always done this. I've always been OCD about it because I run events and have 50 people want to shake my hand and I don't allow them to shake my hand. And I have a very simple method that you can all do. You put a cup of coffee in one hand and I used to hold the New York Times and the other. But now I just put a phone because when I was a journalist and I was at events, I would just put the New York Times in the other hand or a mullskin. And then when people came up to me, I'd just throw my elbow out. If everybody washed their hands, if everybody didn't shake hands, if silly things,

like door handles and touching, you know, um, iPads to sign our names that everybody touches together. And we shut down things like, because it's not just America's terrible traditions of shaking hands. Uh, there are other traditions like bushering live exotic animals in wet markets in close proximity to each other,

especially things like bats and things that actually are trafficking, these shutting down wet markets. Um, and wearing masks like they do in Japan. When you're sick in Japan, you wear a mask so you don't get other people. then this sense of personal space. If we actually did all these things diligently, the virus would not spread as well. And we could go back to work. But the reason we're doing quarantine is because

we actually don't think people will do this. If everybody learns from this that the economic, because in Japan, they're back to work. And in China and Shanghai, they're back to work. And I ask people in Shanghai and asked people in Japan, and I've been talking to people, they said personal behavior has changed radically. People are not touching with money. They're not touching money. They're doing like, you know, the Ali Pay and other things. tapping it. So I have a thesis here that if you do this, if you're radically disciplined in hygiene and touching stuff, that we could get back to work. What do people think? Good luck with that in America, where we have a bias towards individualism and I think a higher

focus on doing things ourselves. And I joked earlier about the kids in Florida who were talking about not worrying about getting the corona. We didn't do anything nationally about that. We just went, oh, look at those dumb kids. They're going to make everything worse. And then we had dinner, you know? I don't know how to fix this. I don't think we're going to invent a top-down government system to impose controls on the states because Texas would secede. And I don't think we really want to have a Civil War 2.0. But maybe with shame, maybe with improved media outlets, maybe with shame. What a great tool. Let's just make shame great again. Like, let's just start shaming people hardcore for being selfish and stupid. But I think this particular fever will not break

to use another analogy that I shouldn't use now that I say it out loud, until we have a different person in the White House that allows for certain elements of the media to stop marching in lockstep behind an illiterate narcissist. Because until we do that, the message people are getting will not be uniform about what we need to do. And therefore, we cannot take collective action. Because if you look at the polling of the U.S. based on party and you break it down by how they view this thing as a risk or not, you can see a clear distinction.

And if a bunch of the country doesn't think it's an issue because they think it's a hoax to get the president, they're not going to do what you just said. And so our country has numerous issues before we can get to the point that you're advocating for. Would it work? Would it help? Yes. Are we nearby? No. But if everybody did it, you could go back to work, right? You agree with my basic premise. Like, we kept the distance and we everybody cleaned and nobody shook hands. There's an argument that you could go back to work. As a really, really non-epidemiologist, as a financial technology blogger, I agree with your point. But I've talked to, I actually talked to a doctor today and he said you nailed it. That's exactly what would work. Sarah, what do you think?

And I don't know this doctor was on Twitter, but yeah. I think unfortunately, humans are fallible. I mean, you have two daughters. If you propose this plan to them, do you think that they would abide by these rules? So I was on the edge of my seat when you went to break what your plan was going to be. I just unfortunately, as my sister would say, I'm not picking up what you're putting down. Oh, wow. That's a bummer. I just thought for sure that this would work. And that was a good pun, by the way, given your plan just FYI. I hope we all caught that. I got it.

I did get it. Eight out of ten. All right. All right. Room to improve. I got it. Let's talk about what the end game is here and how close we are to it. I predicted last week that this would be peak fear week.

People were pretty fucking scared this week. Excuse my French. I think next week is the week of except, I mean, I think next week and it's certainly starting to happen in San Francisco, Los Angeles, New York, but we kind of accept what's gone, what's happened and next week will be the week of testing and we'll all know somebody who's been tested and the week after that two weeks from now, which would put us into like the end of March beginning of April, the first week in April will be the week we all know somebody with it or multiple people with it who are just fine and maybe we know somebody else who knows somebody

who is not fine. And then the week after that, the second week of April, my best guess, we're back at work and things get back to normal and the couple of weeks after. After that, we're cleaning up, say, April 15th until May 15th, or just call the end of May, those would be the six weeks of trying to clean up the economic turmoil and mess and get back on. And then in June, people start planning vacations again. That's my timeline, Sarah. What's your timeline and what's your end game here?

I love your optimism. I don't think we're at peak fear right now. Okay. People, not as many people have died, right? We've had 200 deaths in the United States. As more people start to die, I think fear will only increase. So I think we're not peak fear yet. In terms of your model on timelines, I unfortunately think that the assumption in your model,

with your timeline is that we have the hospital capacity to deal with this. And from what I understand, we don't. And so it will continue to escalate and we haven't tested people. So unfortunately, the scenarios that I've seen, the base scenario, was we're back out in the summer. And the negative case was Q4 or Q1. So I'm not ready to say I'm there, but I certainly don't think it's as short as your forecast.

Alex, give me your forecast. When do you think we hit peak fear? When do you think we hit starting to go back to work? Yeah, I was going to say, it's the first time I left. I really wished that you were right because your timeline is much shorter than what I'm hearing. Yeah.

My perspective on this is comes from two places. One, I read the same stuff that everyone else reads. I've got three coronavirus trackers up on my browser at all times tracking the numbers because I'm a number dork like you too. You like the Bing one? The Bing one's great. I mean, good job. Microsoft for getting a free PR win there by putting together a page.

But my spouse is a doctor and her parents are doctors and my other sister's a doctor. My brother-in-law is a doctor. So I have a bazillion medical professionals in my life. And none of them seem very optimistic. I'm not going to quote anyone individually, but I don't think any of them are expecting kind of what you were talking about. So my timeline is you plus two months.

And I say that with trepidation because I'm really sick of being home already and it's been like five days. So I don't know what's going to happen to me. I'm probably going to melt down. But I hope society doesn't because I think Sarah's more right. You take the Myers-Briggs. You're an extrovert? I am an introvert who likes to do short periods of extroversion.

So I will be on this show. I'll be talkative. I will have facial expressions. I will enjoy myself. And then I will go sit and read. book for an hour. So I kind of balance between the two. I'm dying. You're an extrovert. Yeah, you and me are just like dying. Do you want to play tennis? I have a tennis court. Yes, I love tennis. You do? Okay. Come down tomorrow and let's play tennis. You have to stay on the other side of the net the

whole time. Okay. And you have to lose. That's my only. I'm not very good at it, but I have a tennis court and I'm like trying to play tennis with somebody. But this is literally making me go bonkers. I'm an 86% on the Myers-Briggs extroverted. I'm losing my goddamn mind. And I have a tennis court in a pool in a gym at home. Listen, I couldn't be a, I'm literally at a resort when I'm at home. You're going to be so fit. I wish. I'm staying up until two or three in the morning listening to the news and podcast. I'm losing my mind. I can't do this. I'm not built for this for another two months. I'll be totally honest. I'm going to crack. On the Myers-Briggs, I'm an E&TJ. If we're going to talk about male horoscopes, if we're going to bring that into this, which is kind of what that is.

But I'm definitely, according to you that, that's what it is. I love it. I totally love that because I hate horoscopes and I love the Myers-Briggs. ENTJ. I'm sorry. Yeah, but it's just horoscopes for dudes. Anyways, as an E&TJ, let me tell you about my personality. No, but I skew extroverted when it comes to other people and so I

miss very much hanging out with friends. I miss having people over. I miss cooking for people. I miss, like, I'm so glad we've got dogs as well because I've got three things in my house to talk to, you know? Right. But it's not great and it's been since like Sunday here in Rhode Island. It's not very long. So maybe the three of us should just do this

once a week to prevent real cabin fever from coming in and breaking us down. Last night, I kid you not, you know, my poker group is on a slack. I have two poker groups, my New York and my L.A., my New York and my poker group in the Bay Area. And we were on last night. We've been talking constantly. And my friend fired up a Zoom and we had eight of us on Zoom out of the 12 of us immediately. And then we found a poker app, poker with three R's and the number two, where we could set up a virtual room, like a room just for us, not like for other randos to play in.

And we played poker for two hours and talked on Zoom and just goofed off. And it really actually did blow off the steam. And I wanted to thank the guy, what's the kid's name from Zoom, Eric? You on. Not a kid. I'd like to thank the kid Eric.

No, he's a wonderful guy. I don't know him, but he reached out to me. Yeah. Well, I don't know. Young Soul, but. Anyway, this kid, this kid from the Zoom, I'm old now. He, I was talking about how great Zoom is and how, uh, it really does scale because my daughter's

using it for school. I'm using it for the accelerator and my poker group's doing it. And, uh, he DMed me. He was like, hey, can I send you a headset? Because I was complaining about how people have no taste in headsets. He sent me two of these polycom headsets. Shout out polycom. I never accept free stuff, but I'm trying to get Eric to come on the podcast.

I don't think he knows I have a podcast. Um, but he set me two of these polycoms. Oh my God. These things are incredible. Like the best heads every. It costs like 400 bucks. $200 to $400 to $400. But oh my God, Polycom's headsets are sick.

I'm amazed by Zoom's mindshare gains. So back to my spouse because I'd just spend a lot of time with her. She had never heard of Zoom before this crisis. Like she didn't track the IPO like I did. She didn't know about the venture history and emergence like we all did. Didn't care. Didn't care. Our worlds don't touch.

And now her religious group, her work group, she's doing Zoom all the time. She's a Zoom account. She was telling me about it. She goes, oh, you can like, do background this and this and that. I'm like, yeah. I'm doing backgrounds all night. Sarah, how is this, how are you dealing with quarantine? When was the last time you left your house?

I'm dealing poorly. You talked about our extroversion. When we, my first job, we did the Myers-Briggs, would you call the male horoscope? And they had me stand in front of the room as the example for extrovert. They're like, this is the highest we think we've seen someone test. And for abstract thinking, I was the example on both. an extreme personality.

So yeah, it's my worst nightmare. And I went out yesterday for a walk. And, you know, appropriately distanced myself from everyone and assumed it wasn't personal. But,

you know, how I'm also feeling, though, again, to the silver lining, is grateful. Like, I take everything,

I mean, this is such a, I guess a trite thing to say, but it's really true. Like, I wake up healthy and not with a fever. And so I'm, that's sustaining me for some,

for some period of time. You're grateful. And we'll see how long that lasts. I was walking. I took a walk in my charming little town of Hillsborough in the Bay Area. And I just wanted to, everybody was out hiking. I saw a lot. I walked by like, you know, whatever, a half dozen groups of people in a three-mile hike around town.

And I just wanted to stop and talk to everybody. And I was like, hey, how are you doing? And they were just, people just broke eye contact. Like, hey, I mean, it was really weird. It was like some dystopian black mirror episode where everybody needed to get out of the house. But people were very wary of each other. It was super weird. I'm encouraged by that, though, because it means people are actually taking it seriously

the need to be separate. Like, that's good to hear. I'm, you know, 10 points. It was a really odd moment because, you know, when you're walking, when you're hiking and on a road, my understanding, I was taught this in Boy Scouts is you walk against traffic so you see the cars coming so you don't get hit from behind. Yes. And I believe this is correct.

Not everybody understands this, Alex. Some people were not Boy Scouts, and they walk with the flow. of traffic, which is what you do on a bicycle. Yes. So now we have to pause and talk about this. Sorry if I digression to everybody. If you don't want to hear about Boy Scouts, don't listen for the next 30 seconds.

Jason, I forget, how far did you get in Boy Scouts? I was first class. Ah, so I crushed you. All right, good. Back to the show. Yeah. Were you an Eagle Scout? Yeah.

Of course you were. Of course you were, Alex. Of course you were. First class. You didn't even make star. What a quitter. The thing was, I was a bad kid. In my own defense, I was a bad kid.

A great kid at Brooklyn. What do you want me to do? No, you're fine. So this group of people is walking their dog. It's a dad with his two kids and their great, their big golden retriever. And they're walking against traffic. And I'm walking towards them. And dad literally grabs the dog who's not on leash, brings them across the street.

Why is your dog not on leash? That's crazy. And then shuttles his two kids the other side of the street. And I was like, wow, this is what it's like. You know, like this is, we literally can't come. within six feet of each. I had to pull his family to the other side. I mean, it's depressing, but I mean, I guess, again, just encouraged by people actually taking it seriously. I just, but I want to know if we could fast forward the tape today.

Like, if you're listening to this in a month, you know what happened. But I'm curious what that same interaction is like in a week. If Sarah's right, they were not at peak fear yet, they might run in a week if the death toll is very high. They might not just slowly shuffle across the street, you know, politely. They might be wearing masks and gloves. They might be wearing masks and gloves. You might be wearing masks and gloves. You might be wearing masks and gloves. You might just be at home and miss the entire thing. Well, back to my theory is on getting back to work because I do think it's, this needs, I think we're getting back to work in three weeks because I don't think the economy can handle it.

And I think we're going to make the tradeoff very quick. I think it's going to be two or three weeks from now. We're going to make the trade off to go back to work and deal with the deaths, provided the hospitals are not in chaos. And if this thing goes for three months and people have to stay at home, I'm actually worried about civil unrest. Are you, Alex? Yeah. Well, I wish I had one more week of data before I answer that question. So far, there's still food.

And you can still find toilet paper and stuff if you look for it. So right now, no, I'm not concerned. If that gets fractionally worse, no, I'm not concerned. If it gets 50% worse, I start to get worried. If we have actual shortages in this country, something that we're not accustomed to and haven't seen since World War II rationing, which wasn't even that severe, yes, I am concerned. I do not think we have the national will to pull together collectively and pursue anything

as the United People. And so I think that would lead to tons of disinformation, small-scale rioting, and also don't forget that we're a super armed country, and not everyone with a gun is in a great mental state. So that sounds very scary to me, and I hope we're not there. Sarah, what are the chances of that? I went south really fast to like guns in the streets. I agreed until we got like to the real apocalypse at the end of Alex's story.

Well, you yourself just said you'd think that the hospitals could be overrun. You think that's potentially going to happen. Overrun, then that means. the food supply is going to get, do you think the food supply could get disrupted? Yeah, I think those are hopefully uncorrelated. The hospitals being overrun doesn't necessarily mean we can't get food. But I do think if that happens, the food piece, I agree. That's when it's going to lead to conflict.

And then I think, you know, the question I'm wondering is before it gets to the violence that Alex is worried about, do we have martial law? Like, do we implement martial law? Well, I mean, if people are looting and there's violence, I'm not sure that's a bad idea than, like, people killing each other in the streets. Yeah. And we basically, that means you cannot go on the street. You can stay in your house, but you like Wuhan. We saw the videos of them literally welding apartment building door shuts and building fences around apartment buildings. That's a possibility.

And then they'll bring us food like we're in prison cells. To be clear, though, I don't think we're going to end up there. Like, if I had to bet money, I would put that at a 5% chance. I was about to say 5% or less. Yeah, low single digit. 80% were all bored. 15% some weird stuff happens. 5% is something more extreme happens.

But at Sarah's point, and it just sounds so fascist of me, but I agree. That would be the correct time to have martial law. That's the only time you want it is when you need to keep people safe. And that would also, that something we didn't say was protect the economic backbone of this country. It would protect small businesses, inventories, the flow of trade and goods, and would allow for things to get moving to the system, which is critical. But I think we're putting our Alex Jones hat on a little bit right now and making the preppers happy. So we're probably off the fence a little bit. Yeah.

People right now are buying like five pound bags of rice and guns. I think a potential end game. And I like to talk about the end game because I do think scenario planning is what smart people should do and talk about. I think it would be very interesting. If we do get these tests scaled up and it looks like we're going to have, you know, there's two or three different types of tests. It looks like we had 10,000 tests or something in New York yesterday. I heard we're taken. I don't know if that means processed.

And so that's another piece of data that does not seem to be clear. We have to define what taking a test means. Is that taking it and then it sits in a bag like my mom's test? And she's fine right now. She's getting better. She had a cold and she got the test. And they won't process the test now, which is crazy. But she thinks that there's a lot of tests, like 10,000 tests maybe were taken,

swabs were taken, whatever. blood were drawn, but they haven't actually been processed. But if we get through a large amount of testing, I think a really cool thing to do would be they're doing these. When you go to a restaurant, they do the forehead scan and then they wipe it down, nice and clean with alcohol. But take everybody's temperature. If you want to get on the subway, if you want to get on a bus, if you want to go to a

restaurant or a store, if you want to go to work, you have to have your temperature taken or you get a fine. And then if you get a blood test or whatever the other tests are, you carry that test with you and I know this sounds draconian but you show your papers I'm leaving I'm on the subway I could get randomly stopped to get my temperature taken and to show my test results and if your test results if you don't have test results and you don't have it you get a fine and if you get caught twice doing that you know whatever the fine increases and people need to take it seriously and we could all start going back to work if we have had the test and we should make an incentive

system where that's the you know that's a pretty good carrot I get to leave my house I get to go to work. I get to go to a restaurant if I have the test. And then I think we just start paying people to take the test. So basically you go to a store, you get a $5 coupon for a local business, right, a $5 gift card, which then would spur the economy or a $10 gift card. We give you a $10 gift card if you're willing to take a test. So show up at Walmart, imagine if you showed up at Walmart or Starbucks and they had a $10

gift card for everybody who took a swab and confirm that we have your phone number and you sent the text back. and then we send you the code for your $10 gift card at Starbucks. I mean, we might get a million people to take a test in the next week. Yeah. Pay people to take the goddamn tests? I don't think any one of the three of us is super motivated by $10. But like if you make it 100, back to Sarah's point about how much money we can kind of push to the system,

you can make this attractive to everybody. Yeah. And I think that wouldn't be a terrible idea. But Sarah and I were wincing, I think, on our cameras when you were talking about papers and so forth. Yeah. But here's a thought that I saw, I believe it was on Twitter. I forget who said it. But they're like, look, you know, if we.

end up having to do temperature checks when we go into buildings for a while. It's going to seem strange, but also keep in mind that America got very accustomed to taking off their pants, essentially at the airport, you know, and we, I mean, the TSA is insane. Like, I mean, going through that security theater every time dressed me bonkers, but as an American, I can't tell you how many times I got whacked in my nuts. Like, and when they do that, I mean, it just really like, really, is that how far up you have to go? Apparently. Apparently, you have to get swiped. And it's just, it's a. It's a. It's a. weird feeling as a man.

It's not great. I mean, I used to opt out and get the free TSA massage for years. And then eventually I just got impatient with things and I started going to the scanner. But if we put up with that and we do and we three fly, or we'll go back to flying with this ends, I think we can get over temperature checks as long as they're relatively easy to get through. But I hope that what we don't do is institute a system and then don't remove it. Again, this is not my area of expertise.

But like if we have to do a short term thing, can we make a short term? and actually get rid of it. 2020. That would be great. Yeah, 2020. It's whatever, six months are left in the year. We institute this. What do you think of this idea, Sarah, of people getting back to work and paying people to

take tests and just mass testing, mass temperature taking? I love your entrepreneurialism that there's like, this is so American, there's money in this. But I, as an economist, like, yeah, incentives, sure. Pay people to take tests. It's a great idea. I do really think there's going to be a very interesting test. And Alex mentioned this earlier of, how far do Americans, we're individualist.

We don't like our government telling us what behaviors we can do. And one story we got from a founder we work with who had family in China said, they're now taking your temperature when you land, making you have a consultation with a doctor, then putting you on a bus, like with a medical professional

to the place that you're going, putting you into that house, then locking the floor, wait, this is the crazy part, putting tape over the door to see if you've left since they were last there and then like retesting you. Wow.

I read that and I was like, this can't be, I was like in 1984 or something. I mean, that can't be real. But in some parts of China, that's happening. And I don't ever see that happening in the United States. I just were not a centrally controlled country in a lot of ways. And in a democracy, I just don't know that that's ever going to happen. We don't want people reading our text messages. You know, I just can't imagine us tolerating that.

Yeah. And then I think back to after 9-11 when people were like, yeah, you should totally just, stop everybody and yeah check their bags and yeah it seems like when if if we do see the the ICU's overrun

and the beds overrun that would be the moment that people would lose they're more than willing to lose their civil liberties and take other people's civil liberties when people are dying and they see that and they're scared right I mean that was literally the

plot of the prequels in Star Wars Yeah, but a big caveat to that is that if you go back to post 9-11, that immediate era right there, those first couple of weeks when we did a lot of national changes, go look at George W. Bush's approval rating. It was up to like,

I don't know, Sarah Backbeard, like 85 or something crazy like that. It was incredibly, incredibly high. Right. We were united as a country. We had a single thing to do. And I think we had a lot less disinformation driving people to think things that are completely insane. Keep in mind that in this country, the Q&ON conspiracy theory, which is horseshit, is still very, very prevalent and often

shows up, and the president retweets accounts that are popular in that world. That is our current reality. It is not the world we used to live in. And Trump is not 43, I think Bush was, right? 43. Anyways, so things are very, very different. I don't know if we could get anywhere close to what we do to the TSA, to start this point about individualism. So I'm not optimistic. So that's why I'm trying to find things that are hopeful to hold on to because I don't see our nation doing much better in the short term, which is a disappointment. And I think we should all soul check there. But here we are. So, all right. As we wrap up, an interesting business story. I just had a representative from Softback on the podcast. And he, Jeff was talking about that they were committed to WeWork.

And now we see a plan to purchase $3 billion worth of WeWork company stock has, they've SoftBank has backed out of that. They cited concerns with regulatory investigations in the firm. They still plan on making a separate $5 billion investment in the company. So I'm not sure exactly how this all parses out. And obviously they're going to have a massive coronavirus impact if people cannot go to work for a couple of weeks and then don't pay their bills. But it seems manageable. They might lose whatever it is, eight, nine, 10 percent of their revenue for the year. What are your thoughts on this? Is SoftBank? Is this a major announcement and is WeWork going to go under? What do you think, Alex? So we talked about WeWork like 12 months ago before the S1 issues. And back when they were very, very hot and the media was very impressed with their ability to grow very quickly. We always say, you know, what would happen in a recession? What would happen when the economy falls out from underneath us?

But we never, ever, ever, ever one said, what if we couldn't get within six feet of other people? So there's a really interesting double issue going on here. not only is the economy, as we discussed earlier, about to hit the brakes incredibly hard with violence, but also we can't show up in the same place. And so we work is in a bind twice. And that's why when it comes up with this tender offer that we were supposed to make, I think it was $3 billion was the idea. I have the WeWork memo up here. And it says there were certain conditions needed to be met or satisfied for the tender offer to be completed. The conditions were agreed to you last year. Certain conditions have not yet been met. And I think those are business.

conditions, things that had to happen in terms of performance, improving cash flow, revenue growth without losses that were as severe. Toss in the mix, I don't see that tender offer happening. I don't know what the value of WeWork really is if it's still losing as much money as we think that it currently is. So Icarus is a story we talk about. And I think it's had historical resonance even to the modern day for a reason. And I think we're seeing essentially the 2020 version of that here. Yeah.

Any thoughts on it? Sarah, I don't know if you guys were ever involved in it as a shareholder. and we work. We were not shareholders and we work. I think to Alex's two points, I would add a third, which is the fundamental challenge and the reason we had a hard time or we didn't invest is because it's a real estate company and not a technology company. And it was fundamentally valued as a technology company as a revenue,

a multiple on revenue. And so I think not only are they going to be slow, as Alex says, in a recession, but then the multiple that you're going to get on that is one for a real estate business. So I, again, I haven't seen the latest, but I would imagine there's three things facing that business that are all going to send it in the wrong direction. But I also think, and this is going to sound very self-serving as an investor, but it does matter who you partner with, right? Because you want to be choosing an investor that's going to be there with you when things

are good and when things are not good. And that can happen for any number of reasons. Yeah. How are you handling that at the firm right now? You must have some portfolio companies that don't have a lot of runway. some that are lightly impacted, some that are severely impacted. What kind of conversations have you been having the last week or two? For us, as a firm, the first thing we've thought about is the employees at our portfolio

companies. So how can we try to do right by them and give founders advice about how to tell people that they can work from home if they don't feel safe, how to help them, you know, give messaging to their employees, set them up for success from home to retain as many of them as possible. So it's really a human response first. Yeah. Second was going through the portfolio, obviously, and saying who is most at risk. And people who have hardware businesses with parts coming from China, it's going to be harder

for you. And people who have less cash, it's going to be more challenging for you. And if you have a cyclical business, it's going to be harder for you. So talking through and then coming up with the best plan we can for each of those companies and how to support them. I also think, frankly, some investors are stopping and making new investments. Yeah. And I've taken the opposite approach.

I think there's a lot of companies that are really great and are thinking about raising now when they had before. And it's an opportunity. So I, and, you know, I happen to invest in productivity companies who, you know, are benefiting from the work from home and automation. So I actually think there are some companies that, you know, will be able to help in this situation. And I, so, you know, it depends on the, depends on the company. But people first and long-term plans. To pick a number, if you had 10 companies that you were talking, with, of those 10 companies, how many were thinking about making cuts and doing bell tightening, reducing spending? Of 10 or of 5, how many would be talking about that and having discussions about

it? So I'd say four would be thinking about spending less and cuts one, because the truth is a lot of businesses are overcapitalized. You know, there's a lot of downside to the current environment we've been in, but in a lot of, a lot of businesses have raised a lot of capital, and that's not going to last forever. But that, I think, you know, tech businesses will persist far, far longer than, you know, a lot of small business. So they'll be able to maybe say, let's just take a month to month approach to this. We'll just assess it every month, as opposed to saying, we've got to make cuts right now, which is what I'm seeing. I'd say half the companies that we deal with at the seed stage are looking at cutting. So when I talk to 10 companies, five of them are actually have either

made cuts or are talking to me about making cuts, which is. is just crazy because they have six to 12 months typically. And they're just like, how do I get to, how do I keep it at six to 12 months or get it to 12 to 18 months to deal with this? But as a firm, we're investing more. And I told my team, we pushed back the next accelerator class a couple of weeks and we're doing the current one virtual in terms of meetings. And I said, listen, if there were a lot of companies that passed on coming to the accelerator and said, you know what, I think I can just raise around without going to an accelerator. So I'll skip that step. and they're not going to raise, go back to those companies and say, hey, we were interested in you for the accelerator.

And I told my team that we could go from seven companies in the next accelerator class to running three classes up to running three classes concurrently and basically be of service. And write instead of $700,000 in checks for our April class or May class, write $2.1 million because we have the money either way committed. why not get, why not, I guess the cynical way to look at it would be to take advantage of the situation and the positive way to look at it would be to support those companies who need a lifeline, right? And I see it as being supportive and giving a lifeline because people are not going to be able to raise those seed rounds. At the early stage, the angel investors get very nervous. We already saw two different investors in our syndicate changed their investments in the last deal. One of them went from a 20K check size in a syndicate to 2K.

and one of them said, I'm just going to back out of this deal. Now, that's out of, let's say, 75 people invested in, or 60, I think it was 60 people in that deal. So of the 60 people, two of them, you know, which is roughly 4%, decided they were going to change or back out, you know. And so I think we're going to see that more and more. And I'm a little nervous about that is just, you know, when you get to angel investors and they see their net worth go 30 or 40% down in the stock market, they're bracing for 40, 50, 60% down. And so they're like, you know what, I'll just stop Angel investing for the rest of the year and just work on my current portfolio companies. Yeah, two quick things about this. One, on the

overcapitalization point, we've recently seen Uber do an analyst call this week. And they literally just went to their investors and said, hey, we've got 10 billion in unrestricted cash. There's zero percent chance we're not here at the end of the year. And their stock went up 35, 40 percent in a day. Sometimes being over, yeah, I'm sure you're really happy about that. Thank the Lord. The only person tracking Uber more than me is probably you, Jason is out. Exactly. Exactly. But that's cash as a weapon. That's cash as a moat. Usually it doesn't bear out. But in this case, having a lot of money is very useful. And the second thing is, you know, for SaaS companies that are not productivity, that are not seeing the boom that Sarah mentioned earlier,

because we've all heard companies tell us about how much their usage is up and revenues rising for Zoom and for Slack and all this other companies. For SaaS businesses that are not that, they're doing something else. I am curious about their revenue durability because I've always been told by investors and founders like, that SaaS companies are incredibly durable and that consistent revenue creation, that stuff you can predict, is what adds so much value to investors. And so I'm curious if that mantra that has been drilled into my head by people in the scene bears out. It's true. It's true. But you'll see it go down 20, 30 percent, I think, in a year, because I know I looked at our SaaS bills during this, like in the last 10 days, I looked at the

SaaS bills at two of our companies and said, what is essential and what's not. So when you're using seven SaaS products and one of them's, you know, airtable or slack or sales force, you might say, you know what, I don't need this third, fourth, or fifth one. Let's use the features in the other one. Or let's use our Google Docs account, which has everything. Let's go back to doing our CRM in a spreadsheet and just cut one more bill. Well, I don't think it's, I don't think it's five, six, seven. I think it's 15, 16, 17. You know, I think people have, well, I was at crunch base for, you know, two and a half years from like, you know, series A to kind of of right at Series C. And the amount of tooling you need to run a modern SaaS business is large.

There's a lot of things to do. You need a lot of different systems. And so I think that there's probably there is some fact to cut at every company, to be clear, but I'm curious how much this dings the middle class of SaaS, the kind of series A through C level. Because if you're bigger in that, you're pretty much safe. Sorry, you have thoughts as we wrap up here. Lots of thoughts. I think it really does depend if your need to have or nice to have, right? If it's essential to pay your employees, you're not going to remove, you're not going to stop paying for a workday. But there might be some engagement tools that are nice to use that you don't pay for. So I really think it depends what it is, one.

And two, I think it is your go-to-market that really matters. If you're doing inside sales, you can still do that remotely. If you're doing enterprise sales to sell your software, then that's going to be, you know, or it's an on-prem sale, that's going to be much, much harder to do. So I think you'll see people change how they sell their product. and for those where it's not possible, requires data centers, or, you know, it'll be harder.

So I think within SAS, you're right. Some will not be as durable, but they're the not need to have, and they're the ones that have more heavy feet on street sales. Cool. Awesome. All right. Well, we'll wrap up here.

I hope everybody stays safe. If you're listening to this, keep your distance, and be safe, wash your hands. And we're going to get through this. Alex, thanks so much. Everybody check out TechCrunch, and you can follow Alex on the Twitter. He's A-L-E-X.

part of the first name club, shadow, first name club. Sarah R. Cannon is not part of the first name club. She got to, I don't know, who's at Sarah on Twitter? I think that might be Evan Williams' wife, but she's Sarah without an age. You got to go get that. If you're going to be legit in the space, Sarah, if you're going to have any kind of a future, you've got to get one first name club here, okay? For the sake of our friendship, I'll try.

Yeah, try your best. No, in the early days, if somebody wasn't using the account and you knew somebody at Twitter, they could do a solid for you. I was like user 300 on Facebook. Yeah, here it is. I don't know who this Sarah is, but at Sarah is an artist, animal lover,

an individual. She's on Etsy, and she has 25,000. You would not believe the number of people on Instagram who asked me for at Jason on Instagram. It is bonkers. I bet it's Legion. I bet it's a dozen a day, at least.

Yeah, I mean, it's literally hundreds in a month. And then sometimes every now and that a famous person will ping me and I'm like Jason Statham no no Jason Statham That's the best name drop on the show today That wins That's great

And Jason's like come on Mike We're down out here come on And I'm like I don't know That's my Jason Statham I drop drop All right everybody stay safe Thanks for coming on the pod Sarah

Thanks Alex I really appreciate the time Stay safe and if you want to play tennis Sarah let's play tennis over the week Ready to win Play for money All right we'll see you guys later Bye bye