The tech industry was ahead of the Covid curve from the beginning.
Faster than the public and even governments, tech companies were among the first to understand the coronavirus threat back in early 2020 and respond with short-term measures. As the pandemic shows no signs of slowing down into 2021, tech companies are also quickest to make long-term changes to employee policies and priorities.
That may be no surprise, though, since they will benefit most from the post-pandemic digital world.
First to respond to the threat
Back in January, February and even early March, many were were still minimizing the coronavirus’ threat to the U.S. â at times comparing it to the flu â and White House coronavirus advisor Dr. Anthony Fauci was saying there was “no reason” to wear a mask.
But the tech industry was spooked.
In mid-February venture capital firm Andreessen Horowitz put up a sign outside its office telling visitors not to shake hands, according a widely shared Recode article titled “The tech industry is terrified of the coronavirus.” There were 13 Covid cases in the U.S. at the time, Recode reported, but Silicon Valley professionals were already wearing high-quality masks and ordering hazmat suits.
In March, Sequoia Capital released a memo that called coronavirus the “Black Swan of 2020” and warned companies to “question every assumption about your business.”
“In some ways, business mirrors biology. As Darwin surmised, those who survive ‘are not the strongest or the most intelligent, but the most adaptable to change,'” the memo stated.
The memo recalled Sequoia’s famous “RIP Good Times” presentation about how to prepare for the 2008 recession. A year later, the comparison seems even more apt.
Tech companies were among the first to act by restricting travel to China, cancelling major live events and sending employees home. Businesses with more exposure to China, such as Apple, may have been more aware of how the threat would soon come to the U.S.
Live events started falling like dominoes. Mobile World Congress, the world’s largest trade show for the mobile phone industry, was canceled on Feb. 12 after several major tech companies voluntarily pulled out due to Covid-19. By early March Facebook, Google, Microsoft and Adobe all shifted major annual conferences to virtual platforms or cancelled the live portions.
Several days later on March 6, the city of Austin, Texas canceled South by Southwest, the annual tech, film and music conference that brings in hundreds of millions in revenue for the city, as coronavirus concerns went mainstream.
Tech also drove the shift to remote work. Over the span of a few days in early March, Microsoft, Facebook, Google and Amazon encouraged employees in certain regions to work from home if possible. Twitter made work from home mandatory on March 11.
Tech companies have a “more nimble and flexible paradigm about what ‘work’ looks like and how and where it’s done,” said Dr. Gregory Poland, founder and director of the Mayo Clinic’s Vaccine Research Group.
He also pointed out the converted warehouse, open-floor style offices of many tech companies would have been a “disaster” for Covid-19, which spreads primarily through the air.
Poland and Raj Behal, Chief Quality Officer of the primary care chain One Medical, said these companies’ shifts to remote work decreased the risk of community-based transmission.
Quick action was “likely one of the main reasons why California, especially the Bay Area, was not an epicenter,” said Behal.
First to accept the new reality
As Americans followed rising case counts and hunkered down in the spring, most of us were still hoping that the pandemic would blow over by the start of summer, then by Labor Day and then by the end of the year. But tech companies had already been bracing themselves for a much longer timeline. Even forever.
As early as April, Facebook announced it was canceling all live events with 50 or more people until June 2021 â not 2020. The next month, CEO Mark Zuckerberg predicted 50% of Facebook employees could working remotely within the next five to 10 years, and the company might adjust salaries based on an employee’s new location.
In mid-May, Twitter and Square became the first major tech companies to allow employees to work from home permanently. Jack Dorsey, CEO of both companies, has long been an advocate for remote work, and before the pandemic he was considering moving to Africa for half the year.
Microsoft isn’t going as far, but in October it implemented a flexible work from home policy that would allow all employees to be remote less than 50% of the time. Plus, Microsoft employees could get manager approval to work remotely from anywhere full time.
Google was quick this summer to extend its work from home policy until July 2021, and it’s now looking at a “hybrid” return model because internal surveys found most employees don’t want to come to the office every day.
First to benefit from the new normal
The tech world’s quickness to react to the pandemic may not be surprising because they were best positioned to make the shift to a more digital world and to benefit from the new status quo.
The biggest tech companies in the world will come out of the pandemic even stronger.
Apple sold MacBooks and iPads in the spring at rates only previously seen during the holidays as people transitioned to working and staying at home. In August, it became the first company to reach a $ 2 trillion market cap. And in the fall, Apple held three big product launches to kickstart a new supercycle of 5G iPhones, MacBooks with in-house chips and more. The stock is up nearly 80% for the year.
Amazon has been on a hiring spree all year to keep up with surges in online orders. It has brought on 275,000 workers since March and said it would hire 100,000 seasonal employees to manage holiday demand. Third-party sales on its annual Prime Day, which was pushed back from July to October this year, exceeded $ 3.5 billion. Overall Black Friday sales, which Amazon was likely a large part of, rose 22% year over year to a record $ 9 billion, according to Adobe Analytics. The e-commerce trend will only continue to benefit from Amazon, which has the scale to meet the demand. Amazon shares are up more than 70% this year.
Google and Facebook also proved remarkably resilient despite the advertising dip they faced in the early months of the pandemic. Google reported its first revenue decline ever in the second quarter, in part because it relies more on brand advertising than direct-response advertising. But by the quarter ending Sept. 30, ad revenue rebounded, especially for YouTube, which was up 32% from the previous year.
In the third quarter, Facebook’s ad revenue rose 22% compared to 2019, even after the Covid-related decline and an ads boycott over the company’s hate speech and misinformation policies. Both stocks are up nearly 40% for the year.
New winners also emerged from the pandemic.
The pandemic made Zoom a verb and sent its stock soaring over 450% year-to-date. The videoconferencing company had a successful IPO in 2019, but in 2020 it became the default platform for people going to school, going to work and trying to maintain their social lives. In seemingly no time at all Zoom leapfrogged competition from Microsoft, Google and Cisco, forcing those companies, especially Google, to beef up their own video communication products.
Peloton didn’t reach verb status like Zoom did, but it was another major winner. At the end of 2019 people were mostly talking about the “Peloton Wife” ad and wondering whether the bike could become more than an high-end accessory. In 2020 Peloton passed 100 million paid subscribers and now expects the upcoming holiday quarter to be its first billion-dollar quarter for sales.
Despite the battered economy, 2020 was the biggest year ever for software companies going public. Even Airbnb, crushed early on by the decimation of global travel, rebounded enough pull off its IPO late this year.
And the IPO pipeline isn’t drying up in 2021.
What was tech behind on?
The tech industry’s early ambitions to help attack the coronavirus itself didn’t exactly pan out. Google and Apple’s contact tracing tech, for example, never got popular. Instead, what is lifting hopes and markets this month is the established science of vaccination.
Coronavirus misinformation may have been the one thing tech companies didn’t get ahead of fast enough. Though social media platforms did implement policies to fight misinformation, they struggled to contain the spread. Facebook groups with hundreds of thousands of members formed to share conspiracy theories and organize anti-lockdown protests. Conspiracy films like “Plandemic” racked up millions of views on YouTube and other platforms before being taken down. Of course, these companies weren’t helped by the misinformation coming from prominent political figures including President Donald Trump.
Now we’re heading into our first winter and second year of the pandemic as U.S. coronavirus cases average over 170,000 a week and deaths have topped 250,000.
The tech world was ahead of the curve on Covid â if only it could have done more to pull the rest of us along.