Year: 2020

Described by Sequoia Capital as the black swan event of 2020, the long-term economic fallout of the COVID-19 pandemic on startups is still to be seen. However, one effect which is sure to disrupt the MO of many early-stage startups is the cancellation of events and conferences.

According to Forbes, more than 35.3 million people who were planning to attend an event have been forced to change their plans in recent months. And while some might lament being forced to leave their Metallica T-shirts and 2020 Summer Olympics flags in the cupboard, many startup founders are biting their nails at the prospect of lost leads and connections from events and conferences.

The silver lining: Forcing founders to wean themselves off conferences and events as a “go-to” business development tactic might not be a bad thing in the long run.

Based on my experience, many early-stage startups waste lots of time and resources doing the rounds at events without clear aims, using up lots of the founder’s time, without driving much business value. At an early stage in a startup’s journey, every tactic used needs to drive real ROI and ultimately be driving new business opportunities.

So let’s look at why missing out on events might not be the end of the world, and how startups can focus their time, energy and resources on more scalable and consistent lead-gen activities.

What’s my beef with startup events and conferences?

It is worth clarifying early on that conferences and events can provide valuable ROI in terms of lead generation and business development to startups that approach them in the right way.

Getting involved in events as speakers, taking part in panels or showcasing projects via pitch competitions offers the “Golden Ticket” that grants access to the speaker’s lounge, side events and dinners. This facilitates conversations with the most important investors, journalists and potential partners and clients in attendance on a level setting, rather than having to bustle for attention with the rest of the masses on the conference floor.

Aside from increasing the probability of real business development opportunities, taking part in a conference normally includes a free ticket, if not accommodation and travel costs being covered too.

On the flip side, in my experience, going to startup events and conferences as a lowly attendee offers very little tangible ROI, and can accumulate into a considerable expense too. However, as Forbes contributor Sophia Matveeva puts it, even a $10 event is expensive if it doesn’t offer ROI, “because the opportunity cost of events is not just money, it is also time.”

The value of attending events has to be assessed in relation to the time commitment required. If a meetup lasts three hours and includes an hour’s travel, and a large conference is a full-day commitment or even two days in a different location, the opportunity cost of the conference should be carefully weighed against time that could be invested in other lead-generation activities.

Can we approach events/conferences in a data-driven manner?

Unless founders track and assess the ROI from events in the same way as they would any other lead-generation tactic, the chances are that a pocketful of useless business cards and some branded swag (and possibly a hangover) will be the only returns from the time and resources invested.

So how can we assess the value of events in the same way as we would, for example, paid ads? First, founders should be placing metrics on each individual event, such as:

1) Source of lead: Was this via speed-networking, or by reaching out via an event app?
2) Customer acquisition cost (CAC): What were the total costs of this event? Yes, beers count.
3) The number of leads: Only count warm leads. Business-card confetti at speed-networking doesn’t count.
3) The number of those leads closed: How many paying customers did this event lead to?
4) Lifetime value (LTV): How big were these tickets?
5) Sales cycle: How long did the lead take to close?

Assessing the value of particular events via metrics is possible, but it would take a long time. Founders would need to record data over the course of a year, allowing them to highlight which events on the calendar offer the highest chances of returns for the next year. However, the reality is that this requires time and resources, which many early-stage companies simply don’t have. Testing the effectiveness of events also requires trying different tactics, including:

• Paying for a booth
• Becoming a sponsor
• Increasing the number of representatives in attendance
• Paying for a ticket with increased access to side events, etc.

Testing these tactics makes sense for larger-ticket businesses that can expect $50,000+ returns from successful events. But for startups, the chances are that after blasting through lots of time and resources, they will most likely only highlight one of the 10 conferences they attended that offered real ROI. For any other lead-generation activity, this would be considered a massive failure.

Why aren’t events scalable lead-gen activities?

Making lead generation scalable requires monitoring the success rate of different tactics, doubling down (scaling) the activities that are working and putting fewer resources behind those that are not.

This requires founders to be in control of the levers in the sense that they have the ability to add more, reduce or adjust the scale at which different activities are utilized.

This is not really the case for events, for a number of reasons:

1. Conference organizers control the content tracks/side-events/activities that take place during the events themselves. Unless they are organizers/sponsors, founders have few ways to exert influence at the events they attend.
2. Even if a founder does highlight a certain event that brings in lots of leads, there are still a limited number of events that offer access to the right target audiences and cover themes related to particular verticals/niches within their geographic region.

Focus on more scalable lead-gen activities

In my opinion, it makes more sense to focus on lead-generation activities that offer startups more control. There are many different ways for startups to experiment with different tactics within more established inbound and outbound techniques:

Inbound lead generation:

• Content marketing: Monitoring traction of webinar versus e-book, long-form versus short-form
• Blogging: Trying different content formats, keywords and themes
• SEO: Changing keywords, titles, themes and user intent
• Paid ads: Testing different platforms, target users, content styles and themes

Outbound lead generation:

• Direct emails: Sending emails at different times, including different content formats
• Targeted social media messaging: Targeting different positions in a company, on different platforms
• Cold calling: Using different amounts of representatives, targeting different target users

With the aforementioned techniques, there are fewer limits on how many different variations of these techniques startups can experiment with. They are also a lot more flexible in terms of scalability, meaning startups can invest as much or as little in each technique as they please. You can spend $10 on paid ads, or $1,000. You can have two sales representatives, or 200.

When deciding how to best spend lead-generation budgets, founders should ask themselves:

1. Can I control the levers? i.e. the tactics I am using within these tactics.
2. Can I scale to the capacity I need to; is there room for exponential growth?
3. Can I control the rate of scale over time?

The final point is arguably the most important, but often overlooked. Startups need to be able to control the pace at which they scale, meaning they can increase activity when things are going well, but also reduce activity if things aren’t working out, or — in the case of COVID-19 — if the company needs to tighten its belt due to unforeseen, or uncontrollable circumstances.

The best way to drive sustainable growth is by establishing sustainable internal systems and processes. If you think of a business as an engine, we don’t know what the machine can handle until we test its capabilities. We have to be able to scale processes, as this is where we will find the weaknesses in the system. However, we also need to be able to back off when we do find the weaknesses without causing further damage.

Startups need to “stress-test” lead-generation techniques gradually. If a startup is investing $100 in paid media and achieving five sales-qualified leads (SQLs) per month. The next step is not to go “hey, it’s working,” and chuck $1,000 at it. The sensible next step would be to scale up the tactic by investing $200 and aiming for 10 SQLs per month.

Summing up

So, with events and conferences canceled for the foreseeable future, and a high probability that many event organizers will not be able to recover from their losses this year, startups should use this forced pause to re-assess their processes and strategies.

As they say, slow but steady wins the race. The end goal should always be to achieve consistency in processes that are scalable. When startups approach processes in a data-driven, consistent manner, it offers the chance to scale exponentially over time.

Facebook has filled the lead independent board director role with former Deputy Secretary of the Treasury and U.S. Ambassador to Germany Robert M. Kimmitt. Meanwhile, the CEO of The Cranemere Group Limited Jeffrey D. Zients will not seek re-election to Facebook’s board at the 2020 annual meeting, but will serve until then. Kimmitt replaces Dr. Susan Desmond-Hellmann, who was the former lead independent director but left the board in October.

“The lead independent director is an important role for us and we’ve been looking for a leader who can bring significant oversight and governance experience” Facebook CEO Mark Zuckerberg said. “I’m confident Bob is going to make our board and our company better and I’m looking forward to working with him as we continue to build important social infrastructure to bring the world closer together.”

The board now consists of Zuckerberg, Kimmitt, Zients until the annual meeting, Facebook COO Sheryl Sandberg, PayPal’s Peggy Alford, investor Marc Andreessen, Dropbox’s Drew Houston, McKinse’s Nancy Killefer, Estee Lauder’s Tracey T. Travis, and investor Peter Thiel.

Chubb, a major cybersecurity insurance provider for businesses hit by data breaches, has itself become a target of a data breach.

The insurance giant told TechCrunch it was investigating a “security incident” involving the unauthorized access to data belonging to an unnamed third-party. Chubb spokesperson Jeffrey Zack said the company had “no evidence” the incident affected Chubb’s own network and that its network “remains fully operational.”

But the spokesperson declined to comment further or answer any of our questions, including if its customers were affected.

Brett Callow, a threat analyst at security firm Emsisoft, first alerted TechCrunch to the breach on Thursday. According to Callow, the security incident was a data-stealing ransomware attack launched by the Maze ransomware group. Maze not only spreads across a network, infecting and encrypting every computer in its path, it also exfiltrates the data to the attackers’ servers and held for ransom. If a ransom isn’t paid, the attackers publish the files online.

In December, the FBI privately warned businesses of an increase in Maze-related ransomware incidents.

Callow said the attackers behind the incident posted a listing of data, allegedly stolen from Chubb, and included the names and email addresses of three senior executives, including CEO Evan Greenberg.

The listing said the breach occurred in March. But the attackers have not yet published any of the stolen files.

Chubb is one of the largest cybersecurity providers in the United States, offering incident response services and covering companies from losses caused by data breaches. Target last year filed a $74 million lawsuit against Chubb after the retailer claimed the insurance carrier failed to properly compensate it for the costs incurred from its 2013 data breach involving the theft of 110 million customers’ data.

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Toyota, Honda and Fiat Chrysler Automobiles will not reopen North American factories at the end of the month as planned as the COVID-19 disease spreads and dampens demand for new cars, trucks and SUVs.

FCA said Thursday that plants across the U.S. and Canada, as well as headquarters operations and construction projects, are intended to remain closed until April 14, dependent upon the various states’ stay-in-place orders and the readiness of each facility to return to production.

FCA’s Mopar Parts Distribution centers, which have been deemed essential to keeping first responders and commercial vehicles on the road, will continue to operate with paid volunteers. The status of production for FCA’s Mexico operations will be subject to a separate announcement, the company said in a statement emailed Thursday.

Meanwhile, Ford, Toyota and Honda also announced plans to extend closures. Ford will also said it will extend its closure until April 7.

Honda also said will keep all of its automobile, engine and transmission plants in the U.S. and Canada closed into the first week of April. Operations will resume on April 7, Honda said.

“This extension is in response to the continued steep decline in market demand across the automotive industry due to the impact of the COVID-19 pandemic on the economy, resulting in the inability of consumers in many markets to purchase new vehicles,” Honda said in an emailed statement. “As the market impact of the fast-changing COVID-19 situation continues to evolve, Honda will evaluate conditions and make additional adjustments as necessary. In undertaking this production adjustment, Honda is continuing to manage its business carefully through a measured approach to sales that aligns production with market demand.”

Toyota said its manufacturing facilities will remain closed through April 17 and will resume production on April 20. Toyota has numerous factories in North America, including Alabama, Indiana, Kentucky, Missouri, Tennessee, Texas and Baja California, Mexico and Guanajuato, Mexico.

Toyota said its service parts depots and vehicle logistics centers will continue to operate.

Earlier this month, major automakers suspended productions at factories across the U.S., Mexico and Canada. Most had planned to restart March 31. Now as that date gets closer, a number of automakers are pushing back plans to restart production.

COVID-19, the disease caused by coronavirus, has caused upheaval across every major industry as governments issue stay-at-home orders or directives for nonessential businesses to close in an effort to slow the spread of the pandemic. Closures first hit China, where the first cases of COVID-19 popped up three months. Those factories are now coming back online as plants in Europe and North America shut down temporarily.

Startups across the nation and around the world are looking for ways to relieve shortages of much-needed personal protective equipment and sanitizers used to halt the spread of COVID-19.

While some of the largest privately held technology companies, like SpaceX and Tesla, have shifted to manufacturing ventilators, smaller companies are also trying to pitch in and relieve scarcity locally.

Supplies have been difficult to come by in some of the areas hardest hit by the outbreak of the novel coronavirus, and the shortfalls have been made worse by a lack of coordination from the federal government. In some instances local governments have been bidding for supplies against each other and the federal government to acquire needed personal protective equipment.

On Sunday, New York’s governor Mario Cuomo pleaded with local governments to not engage in a bidding war. In fact, Kentucky was outbid by the Federal government for personal protective equipment.

“FEMA came out and bought it all out from under us,” Kentucky governor Andy Beshear told a local newspaper. “It is a challenge that the federal government says, ‘States, you need to go and find your supply chain,’ and then the federal government ends up buying from that supply chain.”

Against this backdrop local startups and maker spaces are stepping up to do what they can to fill the gap.

Alcohol brands are turning their attention to making hand sanitizer to distribute in communities experiencing shortages. 3D printing companies are working on new ways to manufacture personal protective equipment and swabs for COVID-19 testing. And one fast fashion retail startup is teaching its tailors and seamstresses how to make cloth masks for consumer protection.

AirCo, a New York-based startup that developed a process to use captured carbon dioxide to make liquor, shifted its efforts to making hand sanitizer for donations in communities in New York City.

Now, new alcohol brands Bev and Endless West are joining the manufacturing push.

Endless West announced this morning that it would shift production away from its distillery to begin making hand sanitizers. The World Health Organization approved their sanitizers, which the company will produce in its warehouse in San Francisco.

The 2-ounce bottles will be donated to local restaurants and bars that remain open for delivery, so that employees can use them and distribute them to customers. Bulk quantities will be distributed to healthcare organizations and facilities that need them.

Endless West also put out a call for other companies to provide supplies to hospitals and health organizations in the San Francisco Bay Area.

“We felt it was imperative to do our part and dedicate what resources we have to assist with shortages in the healthcare and food & beverage industries who keep the engine running and provide such important functions in this time of immense need throughout the community.” said Alec Lee, CEO of Endless West, in a statement.

Los Angeles-based Bev is no different.

“As an alcoholic beverage company, Bev is very lucky in that we are licensed to purchase ethanol directly from our suppliers, who are doing their part by discounting the product to anyone licensed to purchase it,” said Bev chief executive, Alix Peabody. “Community underscores everything we do here at Bev, and as such, we will be producing hand sanitizer and distributing it free of charge to the homeless and elderly communities here in Venice, populations who largely have insufficient access to healthcare and essential goods like sanitizer.”

Hand sanitizer is one sorely needed item in short supply, but there are others — including face masks, surgical masks, face shields, swabs and ventilator equipment that other startups are now switching gears to produce.

(Photo by PAU BARRENA/AFP via Getty Images)

In Canada, INKSmith, a startup that was making design and tech tools accessible for kids, has now moved to making face shields and is hiring up to 100 new employees to meet demand.

“I think in the short term, we’re going to scale up to meet the needs of the province soon. After that, we’re going to meet the demands of Canada,” INKSmith CEO Jeremy Hedges told the Canadian news outlet Global News.

3D printing companies like Massachusetts-based Markforged and Formlabs are both making personal protective equipment like face shields, as well as nasal swabs to use for COVID-19 testing.

Markforged is pushing ahead with a number of efforts to focus some of the benefits of 3D printing on the immediate problem of personal protective equipment for healthcare workers most exposed to COVID-19.

“We have about 20 people working on this pretty much as much as they can,” said Markforged chief executive, Gregory Mark. “We break it up into three different programs. The first stage is prototyping validation and getting first pass to doctors. The second is clinical trials and the third is production. We are in clinical trials with two. One is the nasal swab and two is the face shield.”

The ability to spin up manufacturing more quickly than traditional production lines using 3D printing means that both companies are in some ways better positioned to address a thousandfold increase in demand for supplies that no one anticipated.

“3D printing is the fastest way to make anything in the world up to a certain number of days, weeks, months or years,” says Mark. “As soon as we get the green light from hospitals, 10,000 printers around the world can be printing face shields and nose swabs.”

FormLabs, which already has a robust business supplying custom-printed surgical-grade healthcare products, is pushing to bring its swabs to market quickly.

“Not only can we help in the development of the swabs, but we can manufacture them ourselves,” says FormLabs chief product officer, David Lakatos.

Swabs for testing are in short supply in part because there are only a few manufacturers in the world who made them — and one of those primary manufacturers is in Italy, which means supplies and staff are in short supply. “There’s a shortage of them and nobody was expecting that we would need to test millions of people in short order,” says Lakatos.

FormLabs is also working on another piece of personal protective equipment — looking at converting snorkeling masks into respirators and face masks. “Our goal is to make one that is reusable,” says Lakatos. “A patient can use it as a respirator and you can put it in an autoclave and reuse it.”

In Brooklyn, Voodoo Manufacturing has repurposed its 5,000 square foot facility to mass-produce personal protective equipment. The company has set up a website, CombatingCovid.com, where organizations in need of supplies can place orders. Voodoo aims to print at least 2,500 protective face shields weekly and can scale to larger production volumes based on demand, the company said.

STAMFORD, CT – MARCH 23: Nurse Hannah Sutherland, dressed in personal protective equipment (PPE) awaits new patients at a drive-thru coronavirus testing station at Cummings Park on March 23, 2020 in Stamford, Connecticut. Availability of protective clothing for medical workers has become a major issue as COVID-19 cases surge throughout the United States. The Stamford site is run by Murphy Medical Associates. (Photo by John Moore/Getty Images)

Finally, Resonance, the fast fashion startup launched by the founder of FirstMark Capital, Lawrence Lenihan, is using its factory in the Dominican Republic to make face masks for consumers on the island and beyond.

“To contribute to the Dominican health efforts, Resonance is acting to utilize their resources to manufacture safety masks for distribution to local hospitals, nursing homes, and other high-risk facilities as quickly as possible. They have provided user-friendly instructions and material and will pay their sewers who can to make these masks from the security of their homes,” a spokesperson for the company wrote in an email. “Resonance is currently working to share this downloadable platform and simple instructions to their website, so anyone in the world can contribute to their own local communities.”

All of these efforts — and countless others too numerous to mention — point to the ways small companies are hoping to do something to help their communities stay safe and healthy in the midst of this global outbreak.

But many of these extreme measures may not have been necessary had governments around the world actively coordinated their response and engaged in better preparation before the situation became so dire.

There are a litany of errors that governments made — and are still making — in their efforts to respond to the pandemic, even as the private sector steps in and steps up to address them.

Creative professionals whose livelihoods have been impacted by the COVID-19 outbreak are flocking to membership platform Patreon in record numbers, the company claims. During the first three weeks of March, more than 30,000 new creators launched on the site — a much larger number than usual. These creators are also acquiring patrons faster than ever and they’re expanding their earnings at a quicker pace, as a result.

Creators around the world are being affected by the COVID-19 outbreak, often indirectly. To cut down on the spread of the novel coronavirus, live shows are being canceled and conferences and other events are being postponed. Other revenue streams creators may have previously relied on may be drying up, as well.

Many of these impacted creators have joined the Patreon platform in recent days to help with lost revenue and their fans have quickly followed.

According to Patreon’s internal metrics, average new patron growth across the U.S., U.K., Canada, Germany, Australia, and Italy is up 36.2% in March compared to February.

In particular, Patreon saw a shift in patron behavior and creator additions starting on Friday, March 13th.

Since then, creators have been joining the platform at a faster rate than at any other point in the company’s history.

In addition, the proportion of creators who acquire their first patron within 10 days of launching has also increased. This is one of the strongest influxes of memberships Patreon has seen, the company said.

Today, Patreon’s platform serves over 150,000 total artists worldwide who generate income by offering exclusive content and communities to a network of over 4 million patrons across 180 countries. To date, creators have earned over $1 billion through the Patreon platform.

However, it’s not all good news. Patreon also notes it’s seeing slightly higher patron deletions as some members are choosing to exit the site due to financial hardships related to the COVID-19 crisis. But overall churn rates are stable for now, Patreon says, and the deletions are not at a rate other businesses are seeing.

Patreon isn’t the only platform seeing significant growth due to the societal impacts of COVID-19.

Fundraising sites like GoFundMe have also seen increases in recent weeks as people ask for assistance with living expenses, food and other basics, small business support, healthcare expenses and more.

GoFundMe recently said that over 22,000 coronavirus-related fundraisers were created on its platform over the past few weeks, collectively raising over $40 million to support hospitals, businesses, and other organizations. The company said it would commit $1.5 million to support communities impacted by the pandemic, as well.

Today 500 Startups hosted a virtual demo day for its 26th batch of startups, a group of companies that TechCrunch covered back in February.

500 is not the only accelerator that moved its traditional investor pitch event online; Y Combinator made a similar move after efforts to flatten the spread of COVID-19 required changes that made its traditional demo day setup temporarily impossible.

In addition to hosting a few dozen startup pitches today, 500 also explained changes to its own format and provided notes on the current state of the venture market.

Regarding how 500 Startups is shaking up how it handles its accelerator, the group intends to pivot to a rolling-admissions setup that will give participants more flexibility; the group will still hold two demo days each year — TechCrunch has more on the changes here.

Regarding the venture market, 500 Startups said venture capital’s investment pace could slow for several months. This seems likely given how the economy has taken body blows in recent weeks as huge swaths of the world’s economy shut down. What advice did 500 have in the face of the new world? What you’d expect: startups should cut burn and focus on customers.

Got all that? Ok, let’s talk about our favorite companies from the current 500 cohort.

Our faves

Two Tesla employees, who had been working at home for nearly two weeks, have tested positive for COVID-19, according to an internal email sent Thursday morning by the company’s head of environmental, health, and safety department and viewed by TechCrunch .

The employees were not symptomatic in the office, and both are quarantined at home and recovering well, according to the email from Tesla’s EHS department head Laurie Shelby. Their co-workers, who were already working from home for nearly two weeks as well, were notified so they can quarantine, the email read. The email did not disclose what locations the employees were working at.

“In both cases, interactions with the individuals had a low likelihood of transmission based on the minimal staff onsite and social distancing measures we took earlier this month,” Shelby wrote in the email.

Tesla could not be reached for comment. Business Insider previously reported on the same internal email.

The email has heightened concern among several Tesla employees that TechCrunch has spoken to, as they weigh the risk of coming into work or using paid-time off or unpaid leave to stay at home. Tesla employs more than 48,000 people at its headquarters, factories, sales and service centers and delivery hubs throughout the U.S. While some employees are able to work from home, the company still has workers at its delivery and service centers as well as an estimated 2,500 people at its Fremont, Calif. factory.

Tesla suspended production at its Fremont factory beginning March 23, days after a shelter-in-place order went into effect in Alameda County due to the COVID-19 pandemic. Some basic operations that support Tesla’s charging infrastructure and what it describes as its “vehicle and energy services operations” have continued at the factory, which under normal circumstances employs more than 10,000 people.

The decision to suspend production at Fremont came after a multi-day public tussle between the automaker and local officials in Alameda County over what was considered an “essential” business.

Tesla has also suspended operations at its factory in Buffalo, N.Y., except for “those parts and supplies necessary for service, infrastructure and critical supply chains,” the company said in a statement. Tesla CEO Elon Musk tweeted Wednesday that he plans to reopen the Buffalo factory to produce ventilators, a critical piece of medical equipment used in severe cases of COVID-19.

The email comes just two days after reports of at least two positive COVID-19 cases at SpaceX, another company headed up Musk. The positive cases at SpaceX sent some employees into quarantine, CNBC reported. The company is making hand sanitizer in house and taking other steps to protect nervous workers, according to CNBC. TechCrunch could not reach SpaceX for comment.

COVID-19, the disease caused by coronavirus, has rippled through corporate and industrial America. Manufacturers have suspended production of vehicles, tech companies have ordered employees to work from home and city, county and state governments have issued a variety of orders to try and slow the spread of COVID-19.

For instance, California Gv. Gavin Newsom issued a stay-at-home directive that ordered all nonessential businesses to close and for residents to only leave their homes for essential needs like groceries or to visit the pharmacy. Other states where Tesla has operations such as New York are also under a stay-at-home order.

Musk’s actions during the pandemic have caused a variety of reactions among employees, critics and his millions of Twitter followers. He has appeared dismissive of COVID-19 in emails to employees and on Twitter, where he has spread a misinformation on the disease, including that children are “essentially immune,” a statement that contradicts with information provided by the Centers for Disease Control and Prevention. In one internal email sent to SpaceX employees, Musk noted that they were more likely to die in a car crash than from the disease. 

Even as Musk seemed to downplay the disease, he has also stepped up to donate medical supplies needed by hospitals and has directed employees to not come to work if they feel ill or are uncomfortable. Tesla employees have received emails from human resources head Valerie Workman that if they could not or were reluctant to come to work they could use PTO or take unpaid time off after they exhaust their PTO. The email told one employee (who spoke to TechCrunch on condition of anonymity) that they would be not be penalized for their decision or face disciplinary action for attendance based on health or impossibility to come to work.

Musk has also donated essential personal protective equipment to hospitals that are facing a shortage of these supplies and has committed to trying to help ramp up production of ventilators.

To someone with a hammer, every problem looks like a nail — and as expected, the tech sector is hard at work hammering every nail it can find. But the analytical prowess of the modern data ecosystem is especially limited when attempting to tackle the problem of potential coronavirus treatments.

It’s only to be expected — and of course lauded — that companies with immense computing resources would attempt to dedicate those resources in some way to the global effort to combat the virus.

In some ways these efforts are extremely valuable. For instance, one can apply the context-aware text analysis of Semantic Scholar to the thousands of articles on known coronaviruses to make them searchable by researchers around the globe. And digital collaboration tools available globally to research centers and health authorities are leagues beyond where they were during the last health crisis of (or rather, approaching) this magnitude.

But other efforts may give a false sense of progress. One field in particular where AI and tech have made large advances is in drug discovery. Numerous companies have been founded, and attracted hundreds of millions in funding, on the promise of using AI to speed up the process by which new substances can be identified that may have an effect on a given condition.

Coronavirus is a natural target for such work, and already some companies and research organizations are touting early numbers: ten or a hundred such substances identified which may be effective against coronavirus. These are the types of announcements that gather headlines around them — “An AI found 10 possible coronavirus cures” and that sort of thing.

It’s not that these applications of AI are bad, but rather that they belong to a set with few actionable outcomes. If your big data analysis of traffic supports or undercuts a proposed policy of limiting transportation options in such and such a way, that’s one thing. If your analysis produces dozens of possible courses of action, any of which might be a dead end or even detrimental to current efforts, it’s quite another.

Because these companies are tech companies, and by necessity part ways with their solutions once they are proposed. Any given treatment lead requires a grueling battery of real life tests even to be excluded as a possibility, let alone found to be effective. Even drugs already approved for other purposes would need to be re-tested for this new application before they could be responsibly deployed at scale.

Furthermore the novel substances that are often the result of this type of drug discovery process are not guaranteed to have a realistic path to manufacturing even at the scale of thousands of doses, to say nothing of billions. That’s a completely different problem! (Though it must be said, other AI companies are working on.)

As a lead generation mechanism these approaches are invaluable, but the problem is not that we have no leads — it’s all the entire world can manage right now to follow up on the leads it started with. Again, this is not to say that no one should be doing drug candidate identification, but that they should be considered for what they are: a list of tasks, with uncertain outcomes, for other people to do.

Similarly, an “AI” technique by which, say, chest x-rays can be automatically analyzed by an algorithm is something that could be valuable in the future, and should be pursued — but it’s important to keep expectations in line with reality. A year or two from now there may be telehealth labs set up for that purpose. But no one this spring is going to be given a coronavirus diagnosis by an AI doctor.

Other places where algorithmic predictions and efficiencies would be welcome in other days are going to reject them during an emergency response where everything needs to be deliberate and triple checked, not clever and novel. The most attractive and popular approaches for fast-moving startups are rarely the right ones for a global crisis involving millions of lives and thousands of interlocking parts.

We’re happy when a vehicle manufacturer repurposes its factories to produce masks or ventilators, but we don’t expect it discover new drugs. Similarly, we shouldn’t expect those working on drug discovery to be anything more than that — but AI has a reputation as being something like magic, in that its results are somehow fundamentally superhuman. As has been noted repeatedly before, sometimes “better” processes just get you the wrong answer faster.

The work on the digital bleeding edge of the biotech industry is indispensable in general yet, in the face of a looming health crisis, uniquely unsuited for helping mitigate the crisis. But it must not be expected to, either among the lay public who read only headlines, or among the technotopians who find in such advances more promise than is warranted.

Google, Amazon, and Microsoft are the landlords. Amidst the Coronavirus economic crisis, startups need a break from paying rent. They’re in a cash crunch. Revenue has stopped flowing in, capital markets like venture debt are hesitant, and startups and small-to-medium sized businessesf are at risk of either having to lay off huge numbers of employees and/or shut down.

Meanwhile, the tech giants are cash rich. Their success this decade means they’re able to weather the storm for a few months. Their customers cannot.

Cloud infrastructure costs area amongst many startups’ top expenses besides payroll. The option to pay these cloud bills later could save some from going out of business or axing huge parts of their staff. Both would hurt the tech industry, the economy, and the individuals laid off. But most worryingly for the giants, it could destroy their customer base.

The mass layoffs have already begun. Soon we’re sure to start hearing about sizable companies shutting down, upended by COVID-19. But there’s still an opportunity to stop a larger bloodbath from ensuing.

That’s why I have a proposal: cloud relief.

The platform giants should let startups and small businesses defer their cloud infrastructure payments for three to six months until they can pay them back in installments. Amazon AWS, Google Cloud, Microsoft Azure, these companies’ additional infrastructure products, and other platform providers should let customers pause payment until the worst of the first wave of the COVID-19 economic disruption passes. Profitable SAAS providers like Salesforce could give customers an extension too.

There are plenty of altruistic reasons to do this. They have the resources to help businesses in need. We all need to support each other in these tough times. This could protect tons of families. Some of these startups are providing important services to the public and even discounting them, thereby ramping up their bills while decreasing revenue.

Then there are the PR reasons. After years of techlash and anti-trust scrutiny, here’s the chance for the giants to prove their size can be beneficial to the world. Recruiters could use it as a talking point. “We’re the company that helped save Silicon Valley.” There’s an explanation for them squirreling away so much cash: the rainy day has finally arrived.

But the capitalistic truth and the story they could sell to Wall Street is that it’s not good for our business if our customers go out of business. Look at what happened to infrastructure providers in the dotcom crash. When tons of startups vaporized, so did the profits for those selling them hosting and tools. Any government stimulus for businesses would be better spent by them paying employees than paying the cloud companies that aren’t in danger. Saving one future Netflix from shutting down could cover any short-term loss from helping 100 other businesses.

This isn’t a handout. These startups will still owe the money. They’d just be able to pay it a little later, spread out over their monthly bills for a year or so. Once mass shelter-in-place orders subside, businesses can operate at least a little closer to normal, and investors get less cautious, customers will have the cash they need to pay their dues. Plus interest if necessary.

Meanwhile, they’ll be locked in and loyal customers for the foreseeable future. Cloud vendors could gate the deferment to only customers that have been with them for X amount of months or that have already spent Y amount on the platform. The vendors could also offer the deferment on the condition that customers add a year or more to their existing contracts. Founders will remember who gave them the benefit of the doubt.

Consider it a marketing expense. Platforms often offer discounts or free trials to new customers. Now it’s existing customers that need a reprieve. Instead of airport ads, the giants could spend the money ensuring they’ll still have plenty of developers building atop them by the end of 2020.

Beyond deferred payment, platforms could just push the due date on all outstanding bills to three or six months from now. Alternatively, they could offer a deep discount such as 50% off for three months if they didn’t want to deal with accruing debt and then servicing it. Customers with multi-year contracts could offered the opportunity to downgrade or renegotiate their contracts without penalties. Any of these might require giving sales quota forgiveness to their account executives.

It would likely be far too complicated and risky to accept equity in lieu of cash, a cut of revenue going forward, or to provide loans or credit lines to customers. The clearest and simplest solution is to let startups skip a few payments, then pay more every month later until they clear their debt. When asked for comment or about whether they’re considering payment deferment options, Microsoft declined, and Amazon and Google did not respond.

To be clear, administering payment deferment won’t be simple or free. There are sure to be holes that cloud economists can poke in this proposal, but my goal is to get the conversation startup. It could require the giants to change their earnings guidance. Rewriting deals with significantly sized customers will take work on both ends, and there’s a chance of breach of contract disputes. Giants would face the threat of customers recklessly using cloud resources before shutting down or skipping town.

Most taxing would be determining and enforcing the criteria of who’s eligible. The vendors would need to lay out which customers are too big so they don’t accidentally give a cloud-intensive but healthy media company a deferment they don’t need. Businesses that get questionably excluded could make a stink in public. Executing on the plan will require staff when giants are stretched thin trying to handle logistics disruptions, misinformation, and accelerating work-from-home usage.

Still, this is the moment when the fortunate need to lend a hand to the vulnerable. Not a hand out, but a hand up. Companies with billions in cash in their coffers could save those struggling to pay salaries. All the fundraisers and info centers and hackathons are great, but this is how the tech giants can live up to their lofty mission statements.

We all live in the cloud now. Don’t evict us. #CloudRelief

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Thanks to Falon Fatemi, Corey Quinn, Ilya Fushman, Jason Kim, Ilya Sukhar, and Michael Campbell for their ideas and feedback on this proposal