Think COVID Will Usher in a Digital Future? Think Again.

For some industries, coronavirus-induced changes are here to stay. For most, though, in-person connection is too central to allow full digital transformation.
Headshot of author Rhea Moutafis
Rhea Moutafis
Expert Contributor
July 21, 2020
Updated: August 11, 2020
Headshot of author Rhea Moutafis
Rhea Moutafis
Expert Contributor
July 21, 2020
Updated: August 11, 2020

The lockdown has lifted in many parts of the world, but the coronavirus crisis is far from over. Many workers, including a lot of tech employees, are still telecommuting. Twitter, for example, is allowing its staff to continue working from home if they prefer to. Zoom looks as if it might keep on booming for quite a while. Delivery services also show no signs of slowing any time soon.

A lot has been written about how these times are propelling us into a tech-driven future. The crisis could provide a host of opportunities for new startups. Colleges, offices, and gyms might stay empty forever as people work, study, and exercise at home. People might never go to a doctor’s office again because they prefer visiting them virtually. Physical cash could fully become a thing of the past. Although it seems plausible that some of these changes will happen, the big leap into a completely digital society remains questionable.

For one thing, people have a strong desire to bond with others in colleges, offices, gyms, and other places. More than that, though, change costs money.With an economic decline in full swing, investors are far less likely to take risks than in times of growth. That’s not to say that nothing will change due to the pandemic. For many fields, however, the new normal might look almost the same as the old normal.

These considerations are important for investors who want to use their capital to foster change. They’re equally important if you’re considering working in a different field than your current one or thinking of starting a new business now or in the future.

Related ReadingWhat COVID-19 Means for the Future of Remote Work

 

Change Is Coming

Telehealth Is Exploding

Even though a pandemic is raging worldwide, regarding other diseases as of lesser importance would be foolish. Just because coronavirus is dominating the headlines doesn’t mean that other health concerns, from heart disease to emergencies, have gone away. Fortunately, this is a concern technology can address. Since a substantial number of medical visits don’t require a physical examination, it makes sense to schedule them as a video call.

Although the quality of the virtual visit might not be the same as being in an exam room with a doctor, it is a good way of providing access when a health professional is far away. Telehealth could be especially convenient for people who are immobile or live in remote places, then.

Mental-health counseling is especially suited for telehealth services. And as demand rises due to the lockdowns and the economic downturn, teleconsultations could make mental-health services more accessible provided that users have a suitable device and access to the internet. Of course, these requirements are a hurdle that might limit the ability of people of lower socioeconomic status from accessing these services.

Despite that impediment, telehealth and similar technologies were already on the rise before the pandemic, and the lockdowns have driven a surge in demand that is unlikely to stall. As users grow more comfortable with the technology, many will be unwilling to go back to commuting and sitting in waiting rooms if it isn’t necessary.

 

Digital Payments Are Here to Stay

Payments via QR-code and the like were on the rise before the pandemic, but social distancing has accelerated the trend. Even skeptics and cash-aficionados have adopted digital payment services to reduce the risk of infection through physical credit cards and cash transactions.

Even though the payment sector overall has taken a hit due to coronavirus, digital-first companies such as PayPal and Square have seen a surge in usage. This trend won’t likely reverse as consumers get more and more comfortable with contactless payment.

 

Big Conferences Could Stay Virtual

Six months ago, most people likely associated virtual events with boredom. After all, watching someone give a speech on the web isn’t like streaming your favorite Netflix series. On the other hand, big, in-person events meant inspiring talks, exciting chats over coffee, and making new connections that could bring you further in the future.

Fast forward to now and the thought of attending a real-life conference is anxiety-inducing at best. At the same time, more and more people are realizing that virtual events don’t need to be a stop-gap, emergency solution. While there are plenty of ways to get an event wrong and bore attendees, recent examples show that it’s more than possible to get people engaged. By scheduling breaks, creating breakout rooms for different conversations, and one-on-one chat rooms, organizers can loosen up the format and make it easier for attendees to get the best possible experience.

Real-life human contact can’t be replaced by virtual events, but the fact that virtual events cut down on travel expenses and logistics makes them a lot more convenient and environmentally friendly. Events with lots of international visitors might choose to stay online or adopt a hybrid format where part of the conference is in-person, but people can also participate virtually if they prefer.

 

Their New Normal Is the Old Normal

Startups Are in Flux

Each crisis comes with a host of new opportunities. As the circumstances change, some market segments dry up while others see a surge in demand. These days, the most in-demand market sectors are served by startups in healthcare, delivery, robotics, fintech, and digital meet-up platforms.

The overall landscape for startups is looking a lot bleaker, however. Should the second half of 2020 be anything like the first half, venture capital funding rounds will be down by around 30 percent. And although almost 50 percent more startups are projected to exit than last year, the overall exit values probably won’t even reach half the value of 2019.

Bar graph data for VC rounds and exit values from 2014 to present
Left: Startup funding rounds since 2014. Right: Exit values of startups since 2014. Graphics by the author. Data from Dealroom.co.

The projections for 2020 are based on the data from January through June, assuming that the tendencies so far stay the same. It’s clear to see that there will be around 25 percent less funding rounds than in 2019, and that the values of exiting startups won’t even be half as large as in 2019.

Despite substantial help from governments, startups in tourism, transportation, and event management might go bust before the crisis is over. In Europe, which was the epicenter of the virus before it shifted to the United States, 40 percent of startups expect their revenue to be less than three quarters of what they’d originally planned. In addition, more than two-thirds of European startups have slowed or frozen hiring. In the U.S., the situation isn’t any better as nearly 70,000 tech startup employees have lost their jobs since March.

Even though this could be an excellent moment to launch a new startup, and although plenty of startups are still going strong, this crisis will cause many others to go bust. It’s too early to say how many businesses will die from the consequences of coronavirus, but the likeliest scenario is that innovation will slow down in most branches as the economy declines and investors grow wary.

As a result, if you’re working in a startup, you’ll have to reckon with slower growth than initially projected. You’ll also likely need to put more effort into fundraising, possibly with lesser returns. If you’ve been thinking about working in a startup, you might want to delay your plans until the ecosystem shows signs of recovery.

 

Offices Wont Stay Empty

The worldwide lockdowns have led to plenty of buzz about the future of corporate offices. The discussion has ranged from pointing out the ways in which remote work could promote productivity and flexibility to lofty predictions of plummeting rents and waves of de-urbanization as workers flee from the world’s cities.

The vast majority of these pieces consistently ignore one aspect of this crisis: Workers are hunkered down at their home desks right now out of necessity. And while some quite enjoy working from home, others aren’t finding it that easy. From the parents who have to entertain and home-school their kids to singles who may feel depressed and isolated, lots of people are eager to return to their workplaces.

Although many CEOs have realized that more flexibility is beneficial for both their workers and corporate expenses, most employees won’t opt to work remotely all the time. Indeed, according to survey data, workers are reluctant to give up in-person exchanges with their colleagues and clients.

Offices might never be as full as before. After all, if this pandemic has taught us anything, it’s the fact that remote work is effective. But instead of erasing offices from the landscape, a more realistic scenario is that work will become more flexible in the future. Although the vast majority of companies won’t shut down their offices, you might not be required to show up to work every day any more if you prefer working from home. Corporations might spend less on space and construct fewer new buildings. On the other hand, the office as a space for social connection and birthplace of innovation is far from dead.

 

Students Want to Be on Campus

Although college deans and national policymakers are pushing massive investments in online classes, many students are reluctant to follow through. The promise of online education is that it will cut down the expense of college and level the playing field for students, regardless of their origin and their household income.

In the last decades, universities have been charging skyrocketing fees. In addition, most colleges have a long history of giving preference to students from wealthy backgrounds. Although on the surface online classes would seem to make higher education more accessible for students of all backgrounds, the reality is often different.

As the New York Times reports, the transition to online learning has been hard for many students. Whether they’re lacking access to computers or internet, suffering from a turbulent or abusive family life, or missing the in-person support of their teachers and classmates, one-third of high schoolers in Los Angeles are not logging in to their online classes.

The situation isn’t any better in colleges and universities. I myself had to make the online shift with the class I’d been teaching at Sorbonne Université. Although most students were on track before the pandemic hit, more than a quarter of them didn’t respond to any emails or messages and never completed the class after shifting online.

I realized the extent of some of their struggles when one of my students left an apologetic note on one of her assignments. She was unable to invest as much time in the class as she wanted to because she was sharing a computer with her sister and the latter had her own Zoom classes all day long.

These difficulties might eventually be smoothed out once students get more used to online classes. But for now, it’s understandable that students are asking for a refund of their fees for 2020. Classes were moved online in a rush, many of which were being taught electronically for the first time ever. Online courses require that students have access to both reliable devices and internet connections to complete modules and coursework. Many students, and particularly those from lower socioeconomic backgrounds, simply don’t have the infrastructure to make the best of this situation. In addition, online classes often aren’t as engaging as the in-person version, making them a lot more demanding in terms of self-motivation. This provides an additional obstacle for students who have an exhausting job on the side or face difficult living conditions with noisy neighbors and annoying roommates.

These are some of the same obstacles that make the adoption of telehealth services harder for people of lower socioeconomic status. These obstacles present a much larger hurdle in education, however, because a student needs to be online and connected for several hours each day. This requires a proper laptop or desktop computer and a stable internet connection. In contrast, a patient could use a cheap smartphone and use the Wi-Fi in a local coffeehouse for the occasional appointment with a doctor.

As for the future, the consensus is that online education can complement in-person instruction but cannot fully replace it. Of course, the idea of recording a lecture once and never having to give it again sounds appealing, and there will be a place for that. Teachers are missing in-person classes where they can get their students’ reactions and feedback in real time, however. Looking at a grid of faces on a screen just isn’t the same.

In addition, there are many subjects that can’t effectively be taught online. Art students probably appreciate looking at a famous painting from their computer screens, but it’s a far cry from seeing an artist’s œuvre in person. Acting classes are hard to implement since many details are not conveyed over the screen too well. And singing in a virtual choir in real-time is almost impossible these days due to the heavy time-lag. Finally, students can’t conduct experiments for biology, chemistry, and physics classes from home because of their scale and cost. Moreover, an instructor generally needs to be present for science experiments because of potential hazards.

Right now, students are also unable to form bonds and friendships during on-campus break times and dorm-room parties. However trivial this may sound, it is an integral part of the college experience and often fosters personal and professional connections that last a lifetime.

Although shifting all classes online might be the only safe thing to do at the moment, colleges won’t stay empty forever. Surely some classes will be taught online in the future, but the freshmen of 2020 needn’t reckon with having to do all their classes online for years to come unless their curriculum is explicitly designed that way.

 

Home Gyms Won’t Last

At-home workouts have been around for decades. With gym closures and other restrictions, right now almost everyone is doing them. Even avid gym-rats have had to face the reality that their second living room is closed indefinitely.

As gyms are struggling to survive, there’s been an unprecedented surge in online gym classes and the sale of home fitness equipment. Those who have enough disposable income are getting Pelotons, as can be seen from a 66 percent explosion in sales last quarter. People on a tighter budget are downloading workout apps in droves.

But at-home-workouts could become less popular again as people return to their offices. With flexible schedules likely to follow in the wake of the pandemic, many people will find it easy to fit in a quick fitness class, especially if they’re not spending hours commuting daily. Plus, getting some exercise can break up the monotony of quarantine. But let’s face it — if you didn’t enjoy getting on the treadmill after a long workday before the pandemic, and you didn’t want to get up at the crack of dawn to get your exercise either, you’re unlikely to do so in the months to come. On the other hand, a membership to the gym or a real-life trainer might be a better motivator to get yourself moving on weekends.

So even though many gyms will go bust before the crisis is over, they’re likely to re-emerge in one form or another. It’s too early to tell how large the impact of the crisis will be. But even though demand for gyms and personal trainers is practically non-existent at the moment, it’s unlikely that Zoom-Yoga will take over completely.

 

Nothing Beats Live Music

Instagram Live has featured some mind-blowing hip-hop parties during the pandemic. Choirs have been collaborating online. Artists have been recording and releasing songs from their homes.

But if you’ve ever been to the opera or a live concert, you know that not even the most luxurious decor and the most expensive stereos can replace the sensation of thousands of people jamming along to the same rhythms and melodies. The experience of standing in unbearable heat or pouring rain just to see your favorite artist provides the building blocks for lifelong memories.

While musical tastes vary, not many people dislike live music altogether. So it comes as no surprise that people have started attending socially distanced drive-in concerts just to get some of that feeling again.

Although the entire event industry has been hit hard by the pandemic, the damage is unlikely to be permanent where music is concerned. Although we’re seeing more business conferences moving online for good, big concerts, festivals, sporting events, and recreational live events should go back to real-life mode once the crisis is over.

 

The Bottom Line

Some big changes are inevitable, but a society-wide tech revolution is unlikely at the moment. Every human needs a little bit of in-person contact. So even though most people can get through a life full of video conferences for a while, on-site work and meet-ups won’t disappear.

We’ll likely be seeing more flexible work schedules and big events shifting online, either fully or with an accompanying virtual experience. We’ll also see a more widespread adoption of telehealth services and contactless payments.

On the other hand, corporate offices are far from dead. Students will want to go back to the campus, even if they might take some standard courses online. Some gyms will shut down before the crisis is over, but it’s unlikely that consumers won’t appreciate an out-of-the-house workout with qualified trainers anymore. And once enormous gatherings are allowed again, people will want to go back to live concerts and sporting events.

In some sectors, most notably videoconferencing, the virus has acted as a catalyst. Other sectors, like travel and commuting, may suffer in the months after the crisis as consumers have become more aware of unnecessary trips.

While I don’t claim to know it all, these are points to keep in mind if you want to invest money in a company in the months to come, if you’re considering a change in your professional field, or if you’re thinking of building a new business. Though some sectors are experiencing a huge wave of transformation, the Big Digital Revolution doesn’t seem to be on the horizon — not just yet at least.

Related ReadingThe Future of Work Is Flexible

 

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