Enduring Changes: What the World Will Look Like Post COVID-19

By Andy Kangpan on July 13, 2020

We are now a few months into the most significant public health and economic crisis we have seen in several generations. The impact of this virus and the subsequent shutdowns of cities across the globe has made itself clear across an ever growing number of industries and behaviors. While I am convinced that many of the most dramatic changes we have seen will slowly bend back to pre-crisis levels over time, there are a few trends that I believe will persist and drive permanent change in our society. Below are some of those few areas where I expect to experience permanent change.

The New Social Networks Are Around The Corner

Our world is increasingly hungry for new ways to spend time with their family and friends online. One of the more prominent indicators of this desire was the massive rush to adopt video platforms that enabled friends to chat while they were in quarantine. Houseparty, as an example, reportedly experienced 50M signups in a month at the beginning of the pandemic in the US.

This behavior was undoubtedly catalyzed by the emergence of COVID-19, but it has opened the door for many startups to experiment with social models that look fundamentally different from the major platforms we have today. While the world will eventually move back to in-person interactions, I do believe we’ve reached a tipping point for novel social networks based primarily on interactive media (e.g., video, gaming, avatars, audio, etc.). Coupled with new viral marketing loops we have seen with pre-launch apps like Clubhouse, it will be fascinating to see if there’s an emergence of a new player that realistically has a shot at displacing one of the massively penetrated platforms of today.

Another place we have seen this demand for digital social interaction manifest itself is gaming. The growth of the gaming sector has been ongoing for decades, but we are just beginning to see the market open up to a more casual audience that views games as a channel for social interaction, rather than a competitive outlet. Just as eSports has enabled mostly hardcore gamers to channel their competitive spirit, it wouldn’t be surprising to see a new generation of users increasingly channel their social desires through gaming experiences. As an example, Microsoft disclosed in April that the number of subscribers to its Game Pass service surpassed 10M users, with a 130 percent increase in multiplayer engagement in the first month of the crisis in the US. Another example is Nintendo’s “Animal Crossing: New Horizons,” which sold more than 13 million copies in the first six weeks of its release, becoming the Switch’s fastest selling game ever. Beyond being an amazingly fun game to play, the title also has served as a social outlet for millions of people stuck at home. This casual gaming demographic should continue to grow as a coveted segment post COVID-19, and it will be exciting to see the new titles for these users from startups and incumbents alike.

Our Relationship With Food Will Change Forever

People are cooking at home at a rate not seen in over 50 years. Consequently, spending on food has dramatically shifted away from restaurants to groceries. 51% of people are now spending more on groceries than they were pre-pandemic, with an average of $182 more per month. At the same time, they’re decreasing the money they’re spending dining out at restaurants by an average of $27 per month.

This surge in demand for groceries has placed a significant strain on our food system in many ways. One of the more interesting trends we have seen is a surge in demand for local produce, with many consumers looking for easier ways to find and procure products directly from farmers. Many startups that are building tools for farmers to digitize their operations are seeing significant tailwinds in their businesses. As this digital infrastructure continues to mature, consumers should be able to access these products in a more seamless fashion, making it a much more attractive option for a wider swath of the population.

To be sure, when the world begins to permanently reopen there will naturally be a rebalancing of our food spend. However, this ongoing period of cooking at home has made a generation of adults more confident in the kitchen, broad in their skillset, and more aware of the health benefits that come with in-home dining. I believe this will lay a foundation for a consumer market that is more willing to spend on food in new and interesting ways.

The Future of Work Was Already Here (We Just Didn’t Know It)

One of the most dramatic shifts in our society is the almost immediate transition of the entire knowledge economy from offices to homes. According to a recent survey conducted by MIT, as of early April, approximately 50% of the US workforce was working from home, and it is likely to be the case that most companies will allow workers the option to work remotely going into the future. We have already seen Twitter and Facebook setting the stage for remote work to be a predominant organizational model.

As a consequence, I believe that remote-first startups will increasingly be a preferred way of building companies, not the exception that they’ve been historically. For so long, it was commonly believed that remote-first companies would not work for a number of unfounded reasons – productivity would suffer, hiring would be impossible, and culture would be nonexistent. This crisis has challenged these beliefs and proven to some extent that while remote organizations may need to operate a bit differently, they can achieve just as much if not more than their office-centric peers.

It is hard to understate the impact that a permanent transition to remote would have on society as we know it. We spend most of our waking hours working, and the centrality of the shared office is being challenged by more flexible, remote models. One clear implication of this transition is the impact that this could have on the makeup of our major cities. While I believe the recent outflow of workers from places like New York and San Francisco will reverse over time, there may be lasting changes to how we think about space in our most dense cities.

These are just a few of the areas we have been following where we may see lasting change. There are countless other industries that are seeing significant changes that we believe will cause massive disruptions to the status quo – healthcare, hospitality, and real estate to name a few. While we are nowhere near the end of this crisis, we are already beginning to see that the new normal may look nothing like the old.

The views expressed herein are solely the views of the author(s), are as of the date they were originally posted, and are not necessarily the views of Two Sigma Ventures, LP or any of its affiliates. They are not intended to provide, and should not be relied upon for, investment advice. Two Sigma Ventures is not responsible for the content of off-site pages or any other website linked or linking to this site. Your linking to or use of any third party websites is at your own risk. Two Sigma Ventures disclaims any responsibility for the products or services offered or the information contained on any third party websites.