Finding Opportunities in The COVID Crisis
Tags: Covid 19, Startup, Opportunity, Crisis, Market

Finding Opportunities in The COVID Crisis DataSeries Follow Dec 17 · 10 min read

Source: Shutterstock

Thimble, a U.S. startup, offers flexible and short-term business

insurance to SMEs and micro-entrepreneurs. And business

couldn’t be better. “Demand has skyrocketed during the

pandemic,” says Thimble CEO Jay Bregman.

Employers in the U.S. have shed millions of permanent, full-

time jobs and an increasing number of these laid-off workers are

starting their own companies. They need insurance but due to

the uncertainty caused by the pandemic prefer not to take out the

annual policies offered by traditional insurers. Thimble provides

liability coverage for customers in more than 130 professions,

including handymen, landscapers, cleaning people, and dog

walkers. Policies can be purchased directly from the Thimble

website or app by the hour, day, week, month, or year. Bregman

says Thimble has seen an “incredible” rise in demand not only

from micro-entrepreneurs and small businesses but also from

bigger businesses, who, due to the pandemic, can’t forecast

what’s going to happen. “They can’t buy annual policies or

don’t want to buy new policies because they don’t want to be

stuck overpaying or paying for something they don’t need and

so they’re buying our products,” says Bregman. “We think the

time has come for New Age products that allow people to buy

only what they need.”

Thimble’s flexible offer is just one example of why agile

startups are seeing business boom during the pandemic while

insurers and some corporates in other sectors are finding

themselves on the back foot. The creative ways that startups are

responding to existing or emerging needs that are being

insufficiently addressed by large corporates and governments

during the COVID pandemic was the topic of a December 8

roundtable organized by DataSeries, a global network of data

leaders led by venture capital firm OpenOcean (an investor in

Thimble), and moderated by The Innovator Editor-in-Chief

Jennifer L. Schenker.

Panelist Austin McChord, Ex-CEO & Founder of Datto, a

provider of cloud-based software and technology solutions delivered by managed service providers, says he sees lots of opportunity in servicing the needs of SMEs and newly minted entrepreneurs. “A lot of this pandemic stuff is not that dissimilar to when a forest fire comes through and clears out a whole lot of things in an area but then creates new open space for new plants to show up and strive to survive and grow and flourish,” says McChord. “In a huge way, COVID is just making the future come faster.”

People who had considered launching their own businesses but were waiting for the right time are making the leap during the pandemic out of choice or necessity. “If you are in the business of serving these people then you had better be ready to reach out to them and onboard them,” says McChord. “There are so many new offshoots, so many new seeds being planted during this forest fire of a pandemic. I think it’s actually a really exciting time to be in this space. “

Enabling Micro-Entrepreneurs

Panelist Allan Martinson, a co-founder of Estonia-based startup

Xolo, couldn’t agree more. “There are millions of people in the

U.S. and Europe who are involved in independent work and the

crisis is actually creating more opportunities and more growth in

that sector,” says Martinson. Xolo offers a self-service-based,

highly automated, and location-independent management

solution to more than 57,000 micro-entrepreneurs in 119

countries. The company wasn’t sure what to expect when the

pandemic started. “We were quite afraid when COVID first hit

that many of our customers would end up going bankrupt or

close down their businesses,” says Martinson. Xolo sent out an

email to its customer base and asked them how they thought the

pandemic might impact them “We got about 400 replies and

about 25% of them said they were worried that the pandemic

would destroy their businesses,” he says. “We braced ourselves

for the worst but nothing like that happened. Freelancing has

been steaming ahead and actually accelerating during the last six

to nine months and, for us, that is a very welcome development.”

There are around 22 million self-employed people in Europe,

according to a December report compiled by Boston Consulting

Group and Malt, a French scale-up that helps corporates recruit

freelancers. Salaried work peaked around the year 2000, and since then, the number of independent workers has been on the rise across Europe, according to the report. Among them, freelancers are spearheading the growth of independent work: they are the fastest-growing segment of the European labor market. France has seen a 92% increase in the number of freelancers in the past 11 years while Spain has seen a 40% increase. The exception is Germany, where the number of freelancers in Germany has remained steady at around 1.3 million.Though the digital freelancer movement was initially driven by the rise of the IT sector and software developers, it is now continuing to grow thanks to workers from a wide variety of industries.

Servicing SMEs

It is not just the number of freelancers that are experiencing

explosive growth. The creation of new small businesses is also

on the rise, with the U.S. reporting a higher than usual number

of new business applications during the pandemic. In fact, in

the third quarter of 2020, the U.S. experienced the highest

quarter of new business applications since it began recording

data about them in 2004, according to a NPR story.

These new businesses, along with existing SMEs, are in need of

all kinds of IT support services. Datto works with managed

service providers that serve as the outsourced chief technology

officers or chief information officers for small businesses. “That

model has been really successful, and we don’t see that

changing, as it enables person-to-person face-to-face

relationships and that is something that the large players in the

industry just can’t provide,” says McChord.

Beyond IT troubleshooting, cybersecurity is among the top

priorities for companies both big and small in a time of

COVID, says McChord. “On the cybersecurity side the

pandemic has really challenged a lot of paradigms,” he says.

“And a big piece of it is that both small and large businesses

regarded the secure place to work as inside the corporate

network and then they built this big expensive wall around it to

ensure that only good things happen there. Well, guess what? No

one’s in the corporate network anymore. Workers are taking

these machines home, out into the wild, and they‘re all going

through VPNs. And so it has caused a lot of rethinking around

how a lot of that security is done, and where the security

infrastructure gets deployed.”

In the new work-from-home environment time management is

more important than ever, says panelist Fred Krieger, Founder

and CEO at Scoro, a work management platform focused on

SMEs.

“What we offer to companies, regardless of their size, is a

simple promise: we automate their workflow in a way that

allows them to cut five hours per week per person,” says

Krieger. “It is all about being efficient and working on things in

the right way.”

Work management software is “actually drastically growing, it’s

kind of exploding,” says Krieger. “Culturally, a lot of companies

have been completely dependent on different kinds of in-person

activities. The pandemic has pushed them out of their comfort

zone. They finally need to let go of measuring when and how

and where people show up. Instead, they need to actually

measure the outcomes.”

Krieger says he expects market consolidation both in terms of

tools and the number of players in the work management space.

While it can be tougher to sell horizontal solutions during a

pandemic when many SMEs are pinching pennies, Krieger says

he doesn’t see it as a handicap. “From a customer’s perspective,

these nice time management tools are kind of like patches, quick

fixes to problems. But when you have a lot of patches and quick

fixes that is where you get this drive to start consolidating,” he

says. “The pandemic has pushed people to adopt a lot of these

quick- fixes so in the medium-term we think COVID will be a

huge contributor to our success.”

Building a successful business during the pandemic has been

less straight-forward for Booksy, which specializes in helping

book appointments online, mainly for hair and beauty salons,

across different geographies. The salons were hard hit during the

pandemics, with many being forced to close their shops during

lockdowns. “The crisis had a lot of unexpected consequences for

us,” says panelist Marcin Borowiecki, General Manager of

Booksy’s U.S. operations. Rather than focusing primarily on

adding new clients, Booksy shifted its attention to helping

existing clients survive by helping them introduce gift cards or

manage consent forms and making sure the timing and volume

of appointments adhered to social distancing requirements.

The pandemic also opened a new line of business for Booksy in

an area that was completely unexpected. Banks and telecommunication companies, for example, started worrying about controlling — and limiting — the number of people visiting their branches in order to keep their employees safe and abide by government rules. “We have deals with BNP Paribas, with

Credit Agricole, with one of the major telco companies and a couple of other retail players who basically are utilizing Booksy to manage appointments and manage traffic in their outlets,” says Borowiecki. “For us it adds a completely new leg of business and opened up our marketplace to different types of

services that would have been impossible before COVID. “Banks” willingness to get back to business quickly while providing a safe environment for their clients and employees opened the door for a start-up to provide an

important solution for their day -to-day operations.“

Targeting Gaps In The Market

The panelists said they believe there are still plenty of untapped

opportunities to serve SMEs post-COVID, including, the need

for improved knowledge sharing, automation, convenience for

the end user, and the increasing expectations in this context, and

the importance of streamlining processes and design.

Datto’s McChord sees opportunity in knowledge sharing

between colleagues. Tools already exist such as business

communication platform Slack, work tools startup Notion and

Confluence, a web-based corporate wiki developed by

Australian software company Atlassian. “But nobody has nailed

it yet,” he says. “There is definitely a better way out there. If

information can be shared more easily and more quickly, you

could get a lot more done with less people and that would be

huge,” he says.

Ease of use is another area that offers opportunity. SMEs need

and expect turnkey solutions, says Booksy’s Borowiecki. The

goal is to come up with solutions that are customized, automized

and designed to be super easy for customers to use, he says.

Services that help SMEs become more efficient will also be in

high demand, predicts Scoro’s Krieger. “There is a lot of

demand for simplifying processes for companies, both big and

small. “Simplifying starts with creating a proper structure and

understanding what actually is moving the needle and then

becoming more proactive about time management,” he says.

“Companies need to decide what are their long-term goals.

Being efficient doesn’t mean you need to squeeze out more from

your team or from yourself. It means getting to the same result

in less time.”

Thimble’s Bregman sees opportunities in helping businesses

cope with uncertainty. “One of the things that we think about is

non-essential businesses here in the United States, and just how

difficult it has become, and how uncertain it‘s’ become, to run a

non-essential business,” he says. “We naturally think about

insurance. if their businesses shut down, as being part of the

solution to that and we‘re developing a product for that,” he

says. “But even outside of that, we think there are probably

other things, other tools, that can be used for when non-essential

businesses are inevitably going to be closed again.”

As the world adjusts to the new normal, Datto’s McChord sees

an opportunity to develop entirely new types of services for

SMEs that adopt hybrid solutions for workers. “What will small

businesses look like six to twelve months from now, when we’re

not government-mandated to stay home and where people do

their work becomes more of a choice?” he asks. “What does that

hybrid workplace look like? Workers will still probably want to

go to the office some of the time to get out of the house. But on

the other hand, it‘s now a proven fact that workers can be productive, working from home. We need to figure out what the tools and services needed to serve those businesses will look like,” he says.

There is no shortage of spaces requiring innovation, says

McChord. “If I was going to start a startup, I would look at

what are the tools that these big enterprises have that SMEs

don‘t and how do we make this available to small businesses at a

price point that makes sense to them and give them that same

capability so that they can compete with the biggest of the big,”

he says. “Entrepreneurs need to come into work thinking about

‘how do we empower these small businesses to compete and

take on large enterprise?’ If they do that then they’re going

to end up building the right tools and the right products. I think

what’s really exciting is there’s room for so many people to step

up and empower these SMEs to grow and take on their large

entrenched competitors.”