Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
This morning we’re taking a brief look at SaaS stocks ahead of earnings, making note of their recent movements (and recovery), and what those somewhat violent movements could mean for SaaS startups as we head into the new economic world.
Investors generally expect churn (revenue loss) to rise at SaaS firms. For modern software startups that need to raise new capital, more churn means slower growth. If public software companies trip over their earnings reports, clipping their valuations, it could set up a double-bind for a number of startups. Let’s explore.
A recovery, a return
Tracking the value of public SaaS companies is a fun way to understand a piece of the venture capital market. If public SaaS shares rise, their gains help founders raise new money at attractive prices, defending and extending private valuations. When SaaS stocks fall, they do the opposite.
It’s not quite business as usual in the world of business, but in tech, there is still a significant amount of money being raised and invested, both to help sustain the most promising startups, and to help find those emerging despite (or because of) the wider economic and social crises arising from the coronavirus pandemic. Today, one of the biggest names in VC, Index Ventures, announced that it has closed another $2 billion in funds –$1.2 billion that it plans to use for growth rounds (larger, later stage investments) and $800 million that it will put into emerging startups (smaller, earlier rounds, likely for younger companies).
At a time when it’s getting very tough for startups — which are often built not for immediate profit but growth, with big capital infusions to sustain themselves — Index will have its work cut out for it. To date, 70% of its initial investments are at Series A or earlier. Whether that will be a proportion it keeps remains to be seen.
The total amount is larger than Index’s last fund, dating from July 2018, which totalled $1.65 billion ($1 billion growth, $650,000 emerging), but it’s not clear if this was what the firm had intended to raise, or less or more. For some context, another huge VC firm, Insight Partners, last week announced a monster $9.5 billion round, which exceeded the company’s original target of just over $7 billion.
Like Insight, the focus for Index will be both to fund existing portfolio companies as well as seek out those diamonds in the rough that are being built now, a spokesperson confirmed to us.
Despite all the social distancing and tightening of purse strings due to unemployment and other indicators of economic struggle, there have been pockets of opportunity emerging around areas like delivery services, medical and healthcare technology, and of course anything that helps us live our lives in a more efficient and hopefully diversionary way online (which can come in the form of entertainment, but also better services for doing practical and necessary things, like shopping or have a work videoconference without websites falling over or getting hacked).
“Innovation is often born out of adversity,” said Jan Hammer, Partner at Index Ventures, in a statement. “The path to building a great company is not a straight line, with many obstacles and forks along the way. We take the long view and remain committed to investing in ambitious entrepreneurs at this unprecedented time.”
Yes, it is easy for a VC — who I’m guessing is probably not concerned about his income or health in the same way that a front-line healthcare worker or grocery check-out person might be — to wax lyrical about opportunity right now, but that doesn’t mean it’s not something that should be ignored. In fact, I’d argue that finding ways out of this is just as important as us all getting through it in one piece.
Index has remained one of the very active investors in the last several weeks, as a key backer in some of the biggest deals announced for Notion, Fast, Collibra and Safety Culture, “with more to follow,” the spokesperson said.
Other big startups (scale-ups perhaps being a more apt word) include Deliveroo, Glossier, Confluent, Figma, Revolut and Roblox. IPOs from its portfolio over the last couple of years have included Slack, Adyen and Datadog.
“We believe that entrepreneurs hold the keys to the world’s recovery, and we couldn’t support them without the backing of our investors, our limited partners,” said partner Mike Volpi in a statement. “Many of them have been with us for two decades, and we’re especially thankful for their continued commitment in times like these. The success of our entrepreneurs in turn helps to fund the research organizations, universities, medical institutes and the pension funds our limited partners represent, and we couldn’t be more proud to have them as part of the Index Family.”
Indian grocery startup BigBasket has raised $60 million as it scales its business in the country to meet growing demand from customers stuck at home.
Alibaba and other existing investors including Mirae Asset and CDC Group participated in the bridge-round, Vipul Parekh, co-founder of BigBasket, told TechCrunch in an interview. Parekh said the startup intends to close a larger financing round in the next six to nine months.
The eight-year-old startup, which attained the unicorn status last year, has raised about $720 million in venture capital and debt financing to date, according to CBInsights. Indian news outlet Entrackr first signaled about the bridge-round.
Parekh said the startup is aggressively trying to hire more delivery personnel to service the ever growing demand from customers. New Delhi ordered a nation-wide lockdown last month, which has disrupted several businesses.
The volume of orders on BigBasket has surged by up to five times in recent weeks, said Parekh. But the startup is struggling to find enough people to deliver items to customers as many workers have moved to their hometowns or are cautious about working in the current environment, he said.
In the last one week, BigBasket has partnered with Uber and two-wheeler mobility firm Rapido to deliver groceries in parts of India. The startup, like several others, faced severe challenges last month after the 21-day lockdown was enforced as it worked with local state authorities to continue its delivery operations. At one time, it had over 400,000 inventories that it needed to ship but was sitting in its warehouses.
BigBasket operates in more than two dozen cities in India and offers tens of thousands of grocery products to customers. As far as securing inventories is concerned, Parekh said the startup is currently not seeing any issues.
BigBasket’s rival, SoftBank -backed Grofers has also seen a surge in volume of orders. The startup said this week that it delivered in 1 million homes in three weeks.
But despite the growth, Grofers co-founder and chief executive Albinder Dhindsa said online grocery still accounts for only 0.2% of the overall retail market. “I think at the end of this crisis we will probably reach 0.5%, but that is still an insignificant share,” he said.
There could be more demand for electric vehicles post COVID-19 crisis, believes Energica founder Livia Cevolini.
The CEO of the high-performance Italian motorcycle manufacturer offered that point of optimism, as her Modena based EV company remains closed by government decree.
The coronavirus pandemic has forced Energica to hit the brakes on production of its battery powered machines that can reach top speeds of 168 mph.
From lockdown in her Northern Italy home, Cevolini shared perspective on the future of motorcycling, acquisition offers and plans to recharge her company when the COVID-19 crisis subsides.
At a time when her country has been hit particular hard by the coronavirus, she offered some upbeat thinking.
Energica CEO Livia Cevolini on lockdown in Modena, Italy
“I don’t want to look only at the negative…Maybe there are things that are positive that come out of this bad crisis,” Cevolini told TechCrunch on a video call.
One of those is greater demand for EVs after the pandemic. Cevolini highlighted greater awareness of the smog internal combustion mobility creates and scientific evidence that air pollution exacerbates viruses as factors that could swing more folks to electric.
Reporting has made much of urban areas attaining visibly cleaner air — featuring before shots of global cities with smog and after shots of clear skies since COVID-19 forced traffic off the roads.
“Maybe at the end of this situation we will have a greater awareness on climate change. Then people will approach electric with more consciousness,” Cevolini said.
Before the health crisis shutdown most of Italy, Energica had already seen larger demand for its high-performance e-motos, with a price range of $17,000 to $23,000. The company — that has has a California office and U.S. general manager (Stefano Benatti) — filled more orders in the first two months of 2020 than all its sales for 2019, according to Cevolini.
As an EV venture, Energica is located in the famed Italian motor valley and positions itself similar to its neighbors — Lamborghini, Ducati, Ferrari — in offering a merger of sleek design and elite performance.
MotoE Worldcup racing, Image Credits: Energica
The venture is also one of the few e-motorcycle companies drawing engineering tips from competition. In 2018, Energica was named the sole manufacturer to the MotoE Worldup — an electric version of MotoGP motorcycle racing. MotoE riders use the company’s EGO model as their base bike.
Technology from the track is transferring to production models, according to Cevolini. “The goal is to use racing to test in extreme but safe conditions and then we move stuff to the road bikes,” she said.
Energica credits the application of race tech to production e-motos for some of the increased order flow it saw early this year. The company reduced the weight of its 2020 production line by 5% and increased range by 60% based on adaptions it brought over from MotoE.
Track competition is a secondary arena for Energica. The primary venue is an increasingly crowded e-motorcycle marketplace, which will most certainly face declining demand given the economic impact of COVID-19.
Harley Davidson introduced its all electric $29K LiveWire in 2019, becoming the first of the big gas manufacturers to offer a street-legal e-moto for sale in the U.S.
Harley’s entry followed several failed electric motorcycle startups — including Mission Motors — and put it in the market with existing EV ventures, such California startup Zero, with 200 dealers worldwide.
Image Credits: TechCrunch
When it comes to core e-motorcycle specs — such as performance, charge-times and range — Energica has held advantages with its 145 horsepower machines that can charge in 20 minutes for max ranges of 140 to 250 miles.
But the competition is closing in on some of the Italian EV maker’s numbers. In 2019, Zero launched its high-performance SR/F, with 110 horsepower and a top-speed of 120 mph. And the entire motorcycle industry — gas and electric — could face competitive pressures from new EV entrant Damon Motors. The Vancouver based startup debuted its 200 mph, $24K Hypersport this year, which offers proprietary safety and ergonomics tech for adjustable riding positions and blind-spot detection.
On top of strong competition in the e-moto space, there’s a growing uncertainty on the buying appetite for motorcycles that could persist into 2020 — and beyond — given the COVID-19 pandemic gripping the world.
In the U.S., new motorcycles sales didn’t weather the last recession very well, dropping 50% in 2008 and remaining stagnant since. In addition to Energica, other manufacturers, such as Harley Davidson have been forced to stop production due the coronavirus.
Energica CEO Livia Cevolini believes her company has a leg up on its e-moto competitors and an ability to rebound, once it restarts operations.
She flags the manufacturer’s racing connection as something that will continue to give Energica an edge in product development. Speaking to competition with Zero Motorcycles in particular, “We are in a different category,” she said. “They have less power, less range and less fast charge capability.”
Energica has also created another revenue stream through a joint-venture to provide battery, computing and drive-train technology to Dell’Orto, a supplier to the global scooter market.
As more of the major gas motorcycle companies enter the EV market, Cevolini is open to a merger or acquisition, but only on her terms.
“If someone comes to me with a real proposal…that you want to grow our business and our company and not destroy it, we can talk,” she said. “Otherwise, we prefer to go our own way.”
Image Credits: Energica
Energica is prepared to restart production, and has done contingencies for adaptations — such as safe and socially distanced operations — when it gets the go head from the Italian government to reopen.
“We’re ready to fulfill the orders we received before the shutdown and take more,” she said.
When Energica is able to switch on the plant electricity again, Cevolini suspects her niche market of motorcycle enthusiasts will be eager to roll.
“Our customers are telling us they are just waiting to ride again. And as soon as they can ride again, they will ride again,” she said.
Mergers and acquisitions largely grinded to a halt at the end of March, in the wake of the coronavirus pandemic spreading around the world, but today comes news of a deal out of Europe that underscores where pockets of activity are still happening. Avira, a cybersecurity company based out of Germany that provides antivirus, identity management and other tools both to consumers and as a white-label offering from a number of big tech brands, has been snapped up by Investcorp Technology Partners, the PE division of Investcorp Bank. Investcorp’s plan is to help Avira make acquisitions in a wider security consolidation play.
The financial terms of the acquisition are not being disclosed in the companies’ joint announcement, but the CEO of Avira, Travis Witteveen, and ITP’s MD, Gilbert Kamieniecky, both said it gives Avira a total valuation of $180 million. The deal will involve ITP taking a majority ownership in the company, with Avira founder Tjark Auerbach retaining a “significant” stake of the company in the deal, Kamieniecky added.
Avira is not a tech startup, or not in the typical sense. It was founded in 1986, and has been bootstrapped, in that it seems never to have taken any outside investment as it has grown. Witteveen said that it has “tens of millions” of users today of its own-branded products — its anti-virus software has been resold by the likes of Facebook (as part of its now-dormant antivirus marketplace) — and many more via the white-label deals it makes with big names. Strategic partners today include NTT, Deutsche Telekom, IBM, Canonical, and more.
He said that the company has had many strategic approaches for acquisition from the ranks of tech companies, and also from more typical investors, but these were not routes that it has wanted to follow, since it wanted to grow as its own business, and needed more of a financial injection to do that than what it could get from more standard VC deals.
“We wanted a partnership where someone could step in and support our organic growth, and the inorganic [acquisition] opportunity,” he said.
The plan will be to make more acquisitions to expand Avira’s footprint, both in terms of products and especially to grow its geographic footprint: today the company is active in Asia, Europe and to a lesser extent in the US, while Investcorp has a business that also extends deep into the Middle East.
Cybersecurity, meanwhile, may never go out of style as an investment and growth opportunity in tech. Not only have cyber threats become more sophisticated and ubiquitous and targeted at individual consumers and businesses over the last several years, but our increasing reliance on technology and internet-connected systems will increase the demand and need to keep these safe from malicious attacks.
That has become no more apparent than in recent weeks, when much of the world’s population has been confined to shelter in place. People have in turn spent unprecedented amounts of time online using their phones, computers and other devices to read news, communicate with their families and friends, entertain themselves, and do critical work that they may have in part done in the past offline.
“In the current market you can imagine a lot are concerned about the uncertainties of the technology landscape, but this is one that continues to thrive,” said Kamieniecky. “In security we have seen companies develop quite rapidly and quickly, and here we have an opportunity to do that.”
Avira has been somewhat of a consolidator up to now, buying companies like SocialShield (which provided online security specifically for younger and social media users), while ITP, with Investcorp having some $34 billion under management, has made many acquisitions (and divestments) over the years, with some of the tech deals including Ubisense, Zeta Interactive and Dialogic.
ClimateView, a Swedish software development company working on monitoring and visualization tools for greenhouse gas emissions, said it has raised $2.5 million in its latest round of financing.
While the world is gripped by the material and economic toll of the COVID-19 epidemic, the problems society faces from longterm global climate change have not gone away.
It’s against this backdrop that investors including the Norrsken Foundation, an impact investment firm established by Klarna co-founder Niklas Adalberth; and Nordic Makers, an angel syndicate composed of founders from Zendesk, Sitecore, and Unity Technologies, decided to invest in ClimateView. Nordic Makers, Max Ventures, and GGV Capital also participated in the funding, the company said.
Using ClimateView’s software, cities around the world have a window into their climate data — including emissions and other sustainability and resilience information — so that they can plan accordingly for how best to proceed with decarbonization efforts and climate change mitigation plans.
So far, around 1,348 municipalities, townships, and villages in 26 countries have declared a climate emergency, but there’s no real effort to understand from a systems perspective what steps need to be taken to mitigate the worst impacts of the changing global climate, the company said.
“It’s an exciting time for ClimateView as we work to reinvent the way in which society works with the climate challenge,” said founder and chief executive Tomer Shalit, in a statement. “Our solution-focused approach to climate action is already gaining traction in a number of cities across the globe and we hope that, with this investment, we can continue to lay the groundwork for decision making so that, together, the world’s cities and nations can forge a common path towards global carbon neutrality.”
Historically, environmental policy and planning has been limited by a lengthy decision-making, planning-intensive process that hasn’t been able to access the latest data visualization tools and projections to make decisions based on current developments, the company said.
ClimateView’s software provides a central hub of all development, emissions, and projected urban planning data to accelerate the planning process.
The company’s premier project has been its work with the Swedish Climate Policy Council, which used the ClimateView software and suite of services to release a publicly available digital roadmap using the company’s Panorama software.
“Norrsken invests in startups that make the world better, so ClimateView is an ideal fit for us,”said Tove Larssen, a general partner with Norrsken. “We are really intrigued by their ambition to provide a global platform that makes it possible to fight climate change faster and more efficiently, and are delighted to be on board to help them achieve this goal.”
Commercial real estate owners, brokers, and landlords have collectively made many hundreds of billions of dollars a year in recent years as the economy zipped along.
Now, they’re getting clobbered by the pandemic-fueled economic crisis. Worse, their industry may be forever changed by it.
It isn’t news that extracting rent — from nearly anyone right now — is problematic. According to the National Multifamily Housing Council, just 69 percent of U.S. households had paid their rent by April 5 compared with the 81 percent who’d paid by March 5 and the 82 percent who paid by the same time last year. That statistic will almost certainly look a lot worse by May 5, given that the numbers of laid-off and furloughed employees grows by the day.
On the commercial side, the problem is beginning to look as dire. In addition to the countless small retail and restaurant businesses that may be forced to permanently vacate their commercial spaces because they can no long afford to keep them running, a growing number of corporate chains is also beginning to prove unwilling or able to pay their rent.
WeWork, for example, has stopped paying rent at some U.S. locations while it tries to renegotiate leases, according to the WSJ, even as the co-working company continues to charge its own tenants.
Staples, Subway and Mattress Firm have also stopped paying rent as a way to pressure building owners into rent reductions, lease amendments and other measures designed to offset the losses they are incurring owing to the impact of coronavirus.
The question begged is what happens next. While some may see opportunities in distressed assets, it’s very possible that more broadly, the commercial real estate market will never look the same.
For one thing, while small retailers and restaurants melt away, some of their online rivals are gaining ground. Amazon, despite no shortage of bad publicity, gains market share by the day. In fact, it this week again became a trillion-dollar company.
The online streetwear marketplace StockX is also booming, as we reported a few weeks ago. As said its CEO, Scott Cutler, at the time: “We thought we’ve always been a marketplace of scarcity, but now you can’t actually go into a real retail location, so you’re coming to StockX.”
The landscape may change particularly quickly in markets like San Francisco, Chicago, Boston, and New York, where not only is there a density of independent shops and restaurants, but startup employees and other white collar workers are suddenly working from home — and perfecting the art of working as part of a distributed team.
Consider Nelson Chu, the founder and CEO of Cadence, a seed-stage, 17-person securitization platform startup in New York. After recently securing $4 million in funding, Cadence signed a lease last month with a landlord that has agreed to start charging the outfit only when it is able to move into its new uptown digs.
It’s a good deal for Cadence, which doesn’t have to worry about paying for square footage it can’t use. Still, Chu notes that being forced to work remotely in the meantime has opened his eyes to the possibility of incorporating more remote work into the startup’s processes, especially thanks to tools like Slack, Google Sheets, and Zoom.
“You always question whether remote work will impact business continuity,” says Chu. “But now that we’re forced to do it, we haven’t skipped a beat. There could be something to be said for having less office space and allowing the people who commute from out of state to not have to be in the office every day. If anything, this now gives us optionality to consider taking on less space” down the road.
It’s easy to imagine that other founders and management teams are coming to the same conclusion. The possibility certainly isn’t lost on real estate companies.
“Remote work is something we’re thinking a lot about right now,” says Colin Yasukochi, director of research and analysis at the commercial real estate services giant CBRE. “People are right now being forced to do it,” but “I think some will inevitably stick” to working remotely, he says. “The question of how many, and for how long, is unknown.”
Certainly, it’s not the trend CBRE or others in the real estate world were expecting this year. An “outlook” report on 2020 published by CBRE last November sounded understandably rosy. “Barring any unforeseen risks,” it said at the time, “resilient economic activity, strong property fundamentals, low interest rates and the relative attractiveness of real estate as an asset class ” were among the primary factors that supported its prediction that this year would be a “very good year” for commercial real estate.
In the ensuing months, of course, that unforeseen risk has prompted shutdowns that have led to layoffs across nearly every sector of the economy. It has also — by the very nature of it being a viral contagion — made it highly likely that even when people are allowed to re-occupy commercial spaces, they’ll be less enthusiastic about dense workspaces. This is doubly true if they know they can get their work done outside the office.
It could well lead to reduced demand for office space later on. It could also mean the same amount of space — or perhaps even more — with reconfigured office layouts. No one yet knows, including commercial estate brokers.
Mark George, a San Jose, Calif.-base broker with the commercial real estate company Cresa, is currently working from home, where he shares an office with his wife, who is also working remotely for the first time. It’s nice to be home with their children, says George, but being housebound makes it harder to get a pulse on industry changes, particular in his industry.
Brokers are “somewhat isolated,” he says. ” Touring activity has dried up because we can’t show space. City Hall is closed in every municipality, so you can’t pull permits. The industry is really shut down.”
George said that “deals that were at the finish line probably got signed” before the coronavirus really took hold in the U.S. But the “deals that were close and not quite there? Every deal I’ve seen has been put on ice. Everyone is in a holding pattern.”
A Cresa colleague of George in San Francisco, Brandon Leitner, echoes the sentiment, saying that “things are not moving fast.” Still, Leitner expects the firm, which handles clients as big as Twitter to Series A and even seed-stage companies, will see a deluge of activity once the city’s current stay-in-place mandate is lifted and brokers can start showing companies properties again.
Specifically, Leitner expects the market to come down by “at least 10% and probably 20% to 30%” from where commercial spaces in San Francisco has priced in several years, which is $88 per square foot, according to CBRE. He expects 2 million square feet will come onto the market in the city, space that companies “want to get off their books.”
That’s a lot, particularly given that there is already about 3.2 million square feet of commercial space available already, according to CBRE’s Yasukochi, who says a “good amount” came onto the market in the last six months alone.
Landlords, for their part, are “hesitant right now to put a new number on the market,” says Leitner, so they are likely to “make as many concessions as they can” to hang on to and attract new tenants.
Eventually, however, they may have no choice. There’s only so much they can do, and they typically have debt to deal with, meaning they’ll be relying on their relationships with lenders.
According to George, Lenders will be inclined to help in order to preserve their own investments. The Federal Reserve may also give the banks the ability to defer mortgage payments, which will make it easier for property owners to put off charging rent.
Whether that will be enough to get the commercial real estate all the way back after Covid-19 remains to be seen.
“This [pandemic] is something we’ve never experienced before,” notes Yasukochi. He says CBRE’s economists estimate the next two quarters will be “very tough.” Still, he says, the market “might see a substantial” uptick in the four quarter. “It really depends on whether demand bounces back, and whether expansion plans will be put on hold, or permanently [shelved].”
For now, he’s choosing to remain optimistic. It “feels like things go wrong really fast in the Bay Area,” says Yasukochi. “But typically, they come back really fast, too.”
For years, people in the industry have been curious about Hotstar’s premium subscriber base to no luck. Best estimates suggested it had about 1.5 million to 2 million subscribers. Executives at rival firms have expected that figure to be lower.
In fact, a months-long analysis conducted by one streaming firm in India concluded recently that there were 2 million paying subscribers for music and video services. So 8 million is a huge milestone.
Editor’s note:Our writer Rita’s journey from China to the US and back again was planned months before the coronavirus pandemic descended on the world. That descent ended up turning a simple trip home into a kind of epic journey. The changes in her location — which we reference, but do not dwell on, to help anchor the story — gave her a unique perspective on the changing landscape — and outlook — of the world as COVID-19 infections spread. We’re publishing a diary of that period here in part to relay some of that first-person perspective to you, our readers. It goes without saying, but the tech angles run throughout, as they are running throughout all of our lives right now (whether or not we “work” in tech). Apps connect us more than ever at a time when we can’t physically be together, and they are now a critical lever in getting things done. Governments scramble to use tech to track what’s happening — although surprisingly even what we think of as the most totalitarian efforts fall short in a crisis. And at the end of the day, the internet is where all our information is coming from. (IL)
Departing
On the night of March 13, before my flight from Philadelphia back to China, my Airbnb host stopped by my room to say goodbye. I was squeezing a stack of masks and a few bottles of hand sanitizer into my suitcase. They were the remaining stock of coronavirus protective items that I panic-bought in early February as soon as I landed in the U.S. As China’s production picked up speed, I gave away most of my supplies — which I had planned to bring back to my family in China — to friends and relatives in the U.S.
I had also asked my host, a slender, high-spirited botanist in her early fifties, whether she needed any supplies when I arrived at her house in early March. She gave a relaxed smile and said she wasn’t worried. There had barely been any cases in Philly, so there was no need. Plus, she had never worn a mask.
“People think you’re sick if you wear one,” she refused politely. “Why do people in Asia wear them?”
I explained that there’s a big debate on whether masks were necessary for the public. The consensus was that they were effective at preventing the transmission of COVID-19. Health officials in the West had for long recommended them only for patients or someone in contact with those who were sick, though the U.S. has recently moved to suggest mask-wearing for everyone in public.
In Asia, however, mask-wearing was a cultural norm even before the COVID-19 outbreak. Given the disease’s incubation period could be as long as 27 days, which meant many people could be unwitting carriers, wearing masks became an act of solidarity to protect others. Chinese cities had early on mandated mask-wearing in public. For me, they worked both as a placebo and a reminder not to touch my face.
Within a week’s time, the disease had advanced rapidly across the U.S., adding dozens of new cases in Philadelphia. All large events were suspended, and my host suffered from a handful of canceled stays.
I decided to ask her again whether she wanted any protective products. “Yes, that’d be great. I don’t have any sanitizers with me. No masks, either.” Her eyes lit up this time. “But how do you wear one?”
I handed her the items and realized that I was about to flee coronavirus for the second time. When I planned my visit to the U.S. a few months back, I had not the faintest idea it would spiral into two great escapes: first leaving China where the disease just began to spread, and later leaving the U.S. where a similar crisis was taking form.
Weeks 1-2: Fears in parallel worlds
I was getting restless when I left for the U.S. some 50 days ago. Objectively speaking, my chances of contracting COVID-19 were slim. I was previously in lightly-hit cities like Taipei (which was an early mover in putting effective control in place). And 99% of the passengers on my flight departing Hong Kong had masks on. But the sum of uncertain events triggered by the epidemic — from abrupt changes in border controls to canceled flights without notice — elevated my anxiety.
Things felt uncannily normal in Texas when I arrived. It was three weeks before the U.S. reported its first community transmission in late February. None of the screening I anticipated was present at immigration: no temperature checks or even questioning if I had been in Wuhan, the Chinese city where the first coronavirus case appeared. I felt relieved and immediately chucked the mask I had worn on the plane. “It’s safe here,” I thought to myself, seeking solace in the sight of the bare-faced crowd, even though I knew my decision was largely prompted by the prejudice against masks in this part of the world.
My relaxation was short-lived. In fact, I would live the next eight weeks swinging between reason and paranoia.
The relatives and friends with whom I had planned to stay could no longer host me. Their employers, both of Asian descent, had introduced a new 14-day self-quarantine rule on staff who came into contact with visitors from China even though Texas had no such regulation.
Cleaning supplies at a Costco in Plano, Texas, were out of stock in early March when the entire state had just one COVID-19 case. The area has a sizable Asian population. / Photo: TechCrunch
Technically, I could roam free, but fears amongst the local Chinese community were too visible. The digital tools that kept the diaspora emotionally close to home also distanced them from their physical reality abroad. Consuming a flood of fearmongering posts on WeChat, many Chinese expatriates began hoarding household products long before the U.S. saw an outbreak. Chinatowns became ghost towns. My mother was shocked to learn only Asians were wearing masks and messaged me daily saying I should wear one and avoid crowds.
I followed only the latter advice — avoiding crowds — and voluntarily opted for 14-day social distancing, not because I was scared of getting infected but because I was paranoid about passing it onto others asymptomatically. My compulsive information seeking in hopes of better understanding the epidemic only reinforced my angst. No silence I had dealt with felt as unbearable as the isolation amid the immense uncertainties that coronavirus brought to all of humanity.
Weeks 2-5: Coming to terms
When I finally allowed myself to resume socializing two weeks later, I would disclose to people that I had recently been in China out of courtesy. The reactions I received were a mixed bag.
Most of my American friends expressed sympathy for China’s situation and were pleased I was in a safer place. A local dentist refused to see me until 21 days later — then the longest time for a patient to display COVID-19 symptoms — because he lived with someone who was frail. Some Chinese friends living in the U.S. jokingly congratulated me on my escape from the plague, which wasn’t my intention but I admitted I was lucky. A fifty-something Chinese acquaintance avoided shaking my hand and gingerly asked how long I had been in the U.S.
I tried not to be bothered by people’s hint of mistrust. After all, their response was driven by the human instinct to survive. Trust had also eroded with the spread of the epidemic in China, where neighbors avoided conversations and a person’s sneeze in the elevator would make others cringe. Though understandable, these small shifts in behavior could take a toll on social interaction and people’s mental health in the long run.
By then, I knew I probably had a clean bill of health. It helped that Texas was run on wheels and I could easily practice social distancing walking on empty, tree-lined streets. As my mind restored to peace, and I moved to Philadelphia for the second part of my U.S. trip, I began to devour the expanding trove of Chinese-language writings on the disease; they were perhaps one silver lining behind the dark virus cloud.
Trapped indoors, Chinese people were forced to contemplate difficult questions — though sometimes leading to unintended consequences like a rise in divorce cases. The unusual level of civic engagement and discussion sparked by the crisis provided some consolation. Stories of ordinary people fighting illness were vividly told by institutional and citizen journalists. The death of whistleblower Li Wenliang set off an unprecedented amount of anger on the internet. Another enthralling moment came when internet users rushed to preserve a censored interview using coded text.
The unusual, collective outcry against Chinese authorities soon gave way to a fragmented digital world. As China’s heavy-handed lockdown began to bear meaningful results, online users rushed to trumpet the country’s contingency plan. Others submerged in the more mindless activities of mobile gaming and video streaming to pass time. Meanwhile, schools and businesses moved to resume digitally with IT support touted by private tech firms.
Food delivery staff of China’s Meituan worked through the COVID-19 crisis to sustain society’s lifeblood. / Photo: Meituan
The offline world in China was also inching back to normalcy. Physical shops were allowed to reopen and restrictions on movement were being eased nationwide. People increasingly ventured out of their homes, taking masks off to sneak sips of fresh air when guards were out of sight.
For others, the daily routine hadn’t changed much, though life had become more precarious. While it was easy for high-earning professionals to attend virtual meetings and celebrate the remote working boom, those working in services, manufacturing and logistics had not been able to stay home but worked round the clock to sustain society’s lifeblood. They were also unlikely to have paid leave and many lacked employer-provided health insurance. As it turned out, this is just one manifestation of disparity exposed by the health crisis.
Week 6: The price of seeking safety
I knew China was on the horizon as soon as I arrived at my flight’s departure gate. The crowd was uniformly wearing some kind of a face protector. I hadn’t put one on yet. I had been adjusted to a maskless environment for weeks by then and it didn’t seem necessary to wear one during the layover in Chicago, where I cautiously kept a distance from others. There were barely any masked travelers at the airport other than the passengers en route to Hong Kong and Mainland China.
I put on one nonetheless in the spirit of solidarity. But others’ ammunition of protective equipment immediately put me to shame. Many donned surgical gloves, some in lab goggles and even plastic rain ponchos, disinfecting any surface their bodies touched. Drinking water with my mask dangling off one ear now felt transgressive, not to mention I broke a taboo by having in-flight meals.
More than impressed by people’s precautions, I was intrigued by the discrepancy in their access to masks. Paying exorbitant prices could secure the robust but scant N95 respirators. Most had the less expensive surgical masks, but even those became hard to find without connections to a supplier. A few wore the dubious varieties like the sponge mask, the washable cartoon cloth mask (I wore a Hello Kitty one to my elementary school during the 2002 SARS epidemic) and even DIY ones like a fashionable shawl.
Flights also became a microcosm of the disparity in protection: first-class cabin passengers were seated at a supposedly safe distance from one another, while the elbow-to-elbow economy travelers fretted the risk of flying amid an outbreak would outweigh the benefit of returning to what they perceived as a safer country.
Even getting a seat on the plane was a privilege. While airlines were suffering overall due to travel bans, demand could surge temporarily around major policy shifts. Following the W.H.O’s declaration that COVID-19 was a global pandemic, schools around the world moved classes online and shut dorms, prompting international students to go home. Flight tickets skyrocketed. Those who wanted to go home but couldn’t afford the price were stranded.
Week 7: Battling uncertainties
Health checks at a border checkpoint in China to prevent COVID-19 being brought back to the country. / Photo: TechCrunch
While our plane was traveling across the globe, my home city of Shenzhen announced expanded compulsory quarantine for arrivals from four to eight countries — adding the U.S. to the list — in an effort to contain imported cases as the epicenter of COVID-19 shifted overseas.
At 8 PM, the Shenzhen customs checkpoint resembled a hospital waiting room with a barely moving queue a few hundred meters long. Screenings were underway to detect coronavirus cases. The updated policy had not been officially announced, and many travelers were still expecting their family on the other side of the border. Impatience and confusion filled a hall that was lit by nauseating fluorescent lights. Will everyone be tested for the virus at the border or later at a quarantine base? Will foreigners receive the test for free? Will people have to pay for the quarantine?
Even the immigration staffers had few details. China’s containment measures were in flux just like the spread of the virus. The flood of inbound returnees was quickly squeezing the country’s medical resources and filling budget hotels repurposed as quarantine facilities.
At 1 AM, I was finally called upon for a temperature check. I filled out a dozen forms asking similar questions about my travel history and health condition, each going to a different government agency. I wondered why, with China’s alleged technological prowess, this grunt work hadn’t been digitized or streamlined. Are resources for public monitoring going into other areas the government prioritizes?
I felt exhausted, but not more than the customs officer examining me, who had been toiling away for more than 12 hours. Despite having full-body protection, he was unaware his mask had slid beneath his nose.
“When do you get to go home?” I asked. “Who knows? There are so many of you coming back. China can’t afford another outbreak. We have no choice but to work,” he said nonchalantly.
Once my paperwork was sorted, I proceeded to cross the border. China immediately welcomed me with a text message, reminding me to register with the public security bureau as location data from my telecoms carrier showed I had recently been in “epidemic-stricken” America. The virus outbreak was giving Beijing more reason to monitor individuals. The question was why, given the government already commanded abundant citizen data, it seemed to have struggled in their early efforts to track people traveling from Wuhan.
As @thisboyuan reminds me, that the gov’t is scrambling to track people’s movement during the epidemic shows what Beijing has put in place for a national surveillance system still has considerable limitations
I was placed in a group of 20 travelers, most of whom were overseas Chinese students, to wait for the shuttle that would take us to the quarantine hotel. We bonded quickly by grumbling about the surreal eight-hour border crossing, but no one was actually angry. Instead, there was an outpouring of genuine gratitude for frontline health and immigration workers.
Famished, one of us volunteered to put everyone in a WeChat group so we could order food delivery together. The WeChat group, aptly named “3.14 Quarantine”, turned out to be useful for trading information and supporting each other through the erratic quarantine period. A street-sweeping truck was humming at a distance. The clock struck 4 AM as our bus pulled up in front of the hotel.
Travelers arrived at a hotel in Shenzhen that had been repurposed as a quarantine base. / Photo: TechCrunch
Week 8: Embracing chaos
Adjusting to the Chinese time zone became virtually impossible as my day confined to the hotel room was punctuated by a string of sporadic events: temperature checks, meal deliveries, nucleic acid tests, phone calls from various government agencies, and transfers to new quarantine locations. One night, we were given half an hour to pack up and got on a bus that took us to the edge of Shenzhen. There we underwent a virus-detecting test, only to be transported back eight hours later, at 3 a.m., to another hotel in the same area where we had previously stayed.
My quarantine peers were growing impatient with the unpredictable circumstances and began calling any relevant phone number they could find. As we shared in our WeChat group snippets of information we had collected from hotel staff, local officials, relatives and friends, something became clear: The quarantine system was the result of mass mobilization and complex coordination between public and private organizations, ranging from health workers and the Communist Party’s base-level administrative organ (called neighborhood committees) through to government-subsidized hotels and residential complexes.
When policymakers imposed frequent changes, the players implementing them on the ground often ended up scrambling, leading to miscommunication and such counterproductive measures as shuffling us around in crowded buses. They were briefed only on their part of the job rather than the entire process, which remained opaque, so getting close to policymaking power was critical. Calling a relative who worked in the disease control department was probably more useful than asking a hotel staffer. Personal ties seemed to matter even more in China when one sought control in times of uncertainty.
Some of us with insider information learned how to game the system. Before being dispatched to quarantine bases, we had to self-report our household address, for each district government was in charge of quarantining its own returning residents. The more deep-pocketed district normally provided higher-standard lodging and food, a piece of information precious to desperate individuals fighting for marginally better treatment.
I fall into the camp of people embracing chaos, as trying to stay informed and in control over continually updated guidance from above could quickly make me cross the line into anxiety.
There is already an abundance of self-care tips floating around, but having outrun the coronavirus twice, I could at least attest to their efficacy: Pare down your information sources to one or two trustworthy outlets; stay physically active; call people; keep a sense of humor; take deep breaths and perhaps spare some time for a mindfulness talk. It’s better to reserve grit for any long-term changes caused by COVID-19, which are looking increasingly likely.
On the afternoon of March 29, staff from my neighborhood committee came knocking on my door. Clad in blue hazmat suits, they gave me a final temperature check and granted me a piece of paper declaring my completion of the quarantine. I immediately put on a mask and went downstairs.
Things seemed intact at first glance, but a closer look revealed subtle but long-lasting changes since I had left two months prior.
Everyone was wearing a mask — even drivers alone in their cars. Premises had temperature checks and sanitizers at the entrances. Many small restaurants looked deserted; the ones back in business had more food deliverymen waiting about than people dining in. War-like propaganda posters dotted the street, reminding people that the battle against the plague wasn’t over. The world would never be quite the same.
