“If the art of war were nothing but the art of avoiding risks, glory would become the prey of mediocre minds....I have made all the calculations; fate will do the rest.”
Napoleon
On his All-In podcast, Chamath Palihapitya remarked about how his company, Social Capital, is delving deep into companies that they believe will thrive during the corona crisis. I couldn’t help but wonder what areas would actually succeed because of global uncertainty; what industries might prove to be antifragile – some of the world’s biggest brands were started after the Great Recession: Airbnb, Stripe, Slack, and Instagram.
We should be aware that while a rising tide lifts all boats, a tornado can turn those boats into splintered shards of timber. A common heuristic is to peer in sectors where there are only a few competitors – like I touched on in The FDA’s Demise – the returns are endless when the competition vanishes, especially due to macroeconomic conditions.
Many sectors – and thus companies – are recession-proof, but which of them are pandemic-proof? Will some even see runaway growth in a post-quarantine world?
Biotech
While the economy has been split open, splattering every sector with blood, the biotech industry has seen untold amounts of money enter the space. Obviously, the coronavirus is the juiciest prey – every firm is racing to be the first to cure this virus; however, the good news doesn’t end after the flight to safety.
“Triumphs of medical science like the polio vaccine and the eradication of smallpox, or the emerging statistical-technical marvel of medical diagnosis through artificial intelligence, have lulled us into a dangerous complacency.
We need to develop new techniques and technologies for infection control and commensurate vaccines across large populations.”
Henry Kissinger
Biotech has seen a lull since regulations sandwiched on top of each other in the 1980s. We thought Genentech would usher in a new world of exponential biotech growth, but in reality, it signaled the end of an era where a VC and a scientist could achieve meaningful progress in the physical world.
As it were, the finite amount of significant breakthroughs in the medical world in the last decade leaves much to be desired– it’s clear reality has fallen short of expectations. Meanwhile, biological warfare is a disaster waiting to happen and ex ante, the consequence will be an arms race of primordial proportions in the bioinformatics sector; the pace will match that of American physics research in the 1960s.
I suspect we will see greater R&D budgets aimed at discovering the cures for our major existing diseases (coronary artery disease, strokes, and even the flu), but also manufacturing centers, like those created by Bill Gates, to industrialize our approach against future biomedical opponents.
An intellectual vigilante like Gates depicts how maladjusted our healthcare systems are to the current state of affairs: in fact, they could never handle a bank run – the throughout just isn’t available. The writing was on the wall that each step in the treatment process was broken; now we’re lucky to have a chance to start from scratch.
Previously, I touched on why medical advancement doesn’t require a physical presence; uncovering idiosyncratic cures to diseases doesn’t need a white coat. Biologists are already mixing huge amounts of computational power with new statistical tools to solve what were once-unsolvable problems – I think this is the better path in the long run.
How can we combine technology, healthcare, and biology into a system that improves over time? Primarily, it’s about thinking in bets – how we can leverage current capabilities for the most benefit:
Rout people in an intelligent manner from the beginning of the care process, leveraging NLP and virtual chat bots to segment the population into different tranches of medical severity. As the models become better over time, doctors are spending their time where it matters and avoiding false positives. This determines whether a person has a serious illness – triaging is a necessary step from the start.
Develop at-home tests as in-person testing is a ticking time bomb during a crisis. The problem with fragile systems (including just-in-time supply chains) is that when one section collapses, the entire system is at risk of obsolesce: when you need them most, they vanish. At-home tests are impervious to the supply-side dilemma in hospitals worldwide; people who are confident they have the coronavirus can’t be tested. If they could test themselves, the main problem is solved.
Make preventative medicine a priority by focusing on digital health and integrating sensors into the people’s daily lives. As it were, the complete negligence of health-tech firms to pay attention to data privacy has caused consumer use of digital health tools to drop: “55% of consumers indicated they do not trust tech companies to keep their healthcare information secure.” I believe continuous health streaming, uploaded to a secure server with anonymous identities, is the future; however, this can’t happen if data breaches are constant.
Infrastructure
Like we saw from the Great Depression, the easiest way to get people back to work is through an infrastructure bill. Indeed, that is exactly what Trump is trying to get passed through Congress right now – a momentous $2 Trillion infrastructure bill to update our aging transport and public systems.
We can think of infrastructure as a dualism: it exists digitally and physically. Should Trump allocate a percentage of the bill to updating our technological base? Nobody would argue that the internet is a public good equivalent to a shared water supply and electricity, although it took multiple decades for people to see the power of the latter. Luckily, we all know that the internet is a must-have in this generation, but people have unequal access to it because of criminal ISP monopolies and subjective bandwidth caps.
The only way to fix this is government investment in alternatives. China already does this because Huawei is an arm of the government and they have the power to invest billions into the future of telecommunications, hardware, and space. Even if you believe 5G is a buzzword, it’s scary the extent to which the CCP is technologically aware while the West is eons behind. State capacity necessitates governmental awareness about the latest capabilities in hardware and software; unfortunately the CCP is leveraging their authority against minorities and teaching other governments how to do the same.
If the American government was smart, they would be thinking about the best ways to shift our web 2.0 stack to web 3.0. To their credit, the Federal Reserve is concurrently working on a digital dollar so maybe the future is closer than we think?
Physical Infrastructure
“In the seven years between 1946 and 1954, seven years that were marked by the most intensive public construction in the city’s history, no public improvement of any type-no school or sewer, library or pier, hospital or catch basin- was built by any city agency unless Moses approved its design and location.”
New Yorker
The 20th century had no dearth of phenomenal infrastructure projects, including the Empire State building, the Brooklyn bridge, and the Hoover Dam. It was a national point of pride as a nation that we could design and manufacture grandiose infrastructure projects. Can we still do that? Though there are death-defying regulations, we can improve what we already have during this downturn.
We should:
Create safe and speedy public transport systems throughout the country. California has two of America’s largest cities, but LA and SF are proud to show off their ossified, decayed buses and roads – not to mention the startling vacuum of safe subways which other nations have in spades.
Invest in nuclear power plants above all other forms of energy renewal. In 2017, Trump said he wanted to bring back nuclear power plans: the average age of those in America are 39 years old. This makes even more sense in light of oil’s cataclysmic plummet last month to less than $20 a barrel – putting shale workers out of business. We might not get another chance to pursue nuclear technology if we don’t take the chance after this pandemic.
Provide cheaper internet for America’s rural areas like we did with electricity in the early 20th century. As the internet becomes even more necessary, I can imagine a world where the government becomes symbiotic with a new internet provider like SpaceX, as I wrote in The Final Colony.
ViaSat, the current incumbent, is a legacy provider that places its satellites 35,000 km from Earth: people can’t survive on kilobyte download speeds. I suspect this becomes essential in a world where everyone builds borders and walls, effectively curtailing trade. Where else, then, can you do business outside of the internet?
Have we given up on nuclear energy? The world still has roughly the same number of nuclear power plants as we did in 1996 🤔 Only ~16% of countries have nuclear reactors at all.0If you want to make a high-impact bet on the future, odds are that starting a company is the best way to do it. Regardless, one theme of this newsletter is staying abreast of global developments and how we can be prepared for what’s to come. Silicon Valley itself began in dangerous times when the role that technology was to play in all of our lives was unfathomable, but the pioneers didn’t care – they were just excited to keep building.
Both biotech and infrastructure seem like sectors that are garnering these same levels of spirit and while I’m more experienced in the former, I wouldn’t be surprised to see more high-agency people enter either of these spaces in the next few years.