Video Transcript: SXSW Cancelled – How Businesses Can Respond To Coronavirus
The local government in Austin has canceled South by Southwest. This is a major development due to the coronavirus. How does this affect the conference industry?
How does this affect the economy? How does this affect you? And what should you be preparing for if you're a business owner?
Here we go. Hey everyone. Welcome to a special episode of the LA Business Podcast.
Today we're doing a special coronavirus edition. It is Friday, March 6th. And today's the day that South by Southwest has officially been canceled.
And today's the moment where it seems like this coronavirus economic impact situation is becoming real. I have been looking forward all year to South by Southwest. And certainly there are many companies, including Facebook and Google and Adobe, Twitter, who have recently pulled out and created travel restrictions for their employees.
All non-essential travel is canceled. And this creates a massive economic concern for our economy. So let's dive into what this means.
South by Southwest is an annual conference. It attracts 400,000 people. And with these people comes lots of money, lots of opportunity, lots of economic activity.
And it's estimated that South by Southwest annually is a $350 million to half a billion dollar economic impact on the city of Austin. And certainly there are a lot of ancillary businesses that are going to be affected by this. Restaurants, dry cleaners, taxis, any store that sells any local products, any travel or experiential companies that might be losing out on business.
Certainly hotels, certainly airlines traveling into Austin and out of Austin. So you have a massive economic impact by this show, most certainly from a business-to-business perspective. You know, I spent about $4,000 between the ticket and the hotel, the nice hotel that I got in early at the Hyatt, not to mention my flight on South by Southwest.
And I'm sure I'm losing personally about $10,000 of value that I would have gotten from that, from relationships I would have built, and certainly maybe even more in direct advertising business that would have been attributable to the campaign. But certainly the knowledge sharing and the serendipitous conversations that are now not going to happen, and certainly maybe the podcast guests that I certainly now will not have the opportunity to meet. These are all lost opportunities.
Now here's the challenge. Do you want to be the guy or the girl in Austin who has the opportunity to cancel the event but chooses not to, right? There's a risk aversion here, and the risk has been too great.
Do you want to be the person that doesn't cancel South by Southwest or the local city official that chooses not to call a local emergency and then being directly responsible for an outbreak of coronavirus in Austin and potentially people dying in Austin or spreading the disease back to where people fly in from, whether it be nationally, locally, or internationally? It has been anecdotally heard that even flights coming out of various international locations have been canceled. So some people already couldn't make it.
Twitter, Google, Facebook, who are exhibiting or had planned to exhibit at South by Southwest are now no longer able to or had pulled out before this had been canceled. So there was a wave of change as the show was getting ready to start around March 9th, March 13th, something like that. And I think we're, to me, this feels like an economic, a change in the economic moment here in March.
This is a large international event, and certainly other events have been canceled, including Facebook's F8 conference, various Google events. And the challenge is, where does it stop? Anecdotally, I've heard that in Germany, there are no sporting events happening.
And so this starts to hurt a lot of different types of companies. Any travel, any hotels, tour companies, cruises, destinations like Disneyland, any concerts, sports, music companies, destination locations like Las Vegas and New York. I mean, if you have a ticket, if you have a weekend to go to New York or a weekend to go to Las Vegas, are you going to spend your weekend in a room full of people who could potentially be infected with coronavirus?
I think some people are going to think twice, especially considering the risk aversion that we're seeing demonstrated here by the cancellation of South by Southwest. Coaches, any live conferencing events, Tony Robbins, JT Fox, any in-person conference. You have upcoming music festivals, Coachella, EDC, the summer concert season.
How are these going to be affected? Anecdotally, on Reddit, there is plenty of stories of people in the post-production or pre-production or lighting business who are seeing cancellations happening everywhere they go. So lots of people are expecting a lean summer in the entertainment business.
Are people going to still go to concerts in two months? Big question, right? Will the Dodgers season, will Major League Baseball happen?
Will we have a chance to watch the Dodgers beat the cheating Houston Astros? We shall see. So home entertainment, let's talk about who this helps and talk about the bright side.
The bright side for specific types of companies are home entertainment, Netflix, Amazon Prime, Row 8, Tubi, Pluto TV, any healthcare company, anyone that helps you keep clean, safe, sanitary, soap companies, Purell, any company offering masks. Hopefully they actually work, even though the general consensus is that masks are not a good deterrent against coronavirus. Delivery services, I think, are going to have a boom.
Postmates, Grubhub. In fact, I got an email earlier today announcing from Postmates that there is a no contact delivery option. I can order my food, have it delivered.
I don't have to talk to someone. The introvert in me loves that. So as a consumer or a business owner, here's some ideas on what to do next.
Number one, take stock of inventory. Understand that if you are in the business of gathering people, you have a massive challenge ahead of you, depending on consumer confidence, right? I think just like the stock market has been down about 5,000-ish points over the last week.
We have to look at how consumers feel and consumer confidence, how it looks, like what's the general sentiment? And to me, I'm just sensing a bit of malaise. I think we have in the next two months a market downturn.
It has already started. It will continue. Take advantage of this change.
At every opportunity in my career, when there has been change, there has been opportunity. There has been opportunity for me to level up as an employee, for me to learn new things. This is if the market is in a sustained downturn, it'll hurt your pocketbook as a consumer, as a private citizen.
But if you have an idea and you have a vision and you have some imagination, this is a great opportunity to launch that idea and potentially access services, virtual assistants, professionals at lower than market rates if this remains as a persistent threat to the global economy. When you look back at it, the Great Recession of 2008, people including Gary Vaynerchuk, Grant Cardone, big gig economy companies like Uber and Lyft, these companies took advantage of that Great Recession to build their business, build their brand. And sure, it's difficult, especially in a time when there's massive change and sluggishness in the economy.
But a lot of great companies were developed out of the sluggishness of the Great Recession. So there's a massive opportunity. What I'm seeing in markets like on Facebook and with banner ads, I'm seeing brand messaging.
I think there's an important opportunity. If you're a business owner, you have an opportunity to align your business with safety, with risk aversion, with cleanliness. So for example, there's an ad on South by Southwest.
There's an image of a person cleaning the air duct that appears on that you have on top of the above your seat. The ad says, take a look into our enhanced cleaning procedures designed with your safety and comfort in mind. And the headline is enhanced cleaning procedures.
It's key that airlines in particular need to reassure people that their planes are clean. I see another ad for Lendio. Grow your business with an SBA loan, line of credit, or term loan.
No hard credit pull to see options. Options from over 75 lenders. The idea being if you're in need of a loan, now is the time to get a loan.
Certainly companies that enable working from home, Zoom, Slack, certainly many others like Google apps. Great opportunities for people to work from home and avoid day-to-day contact with more people than they need. I think we're going to see a boom for virtual assistants, professionals who have the ability to take care of business, Facebook ad buyers, etc.
And then I think we might end up with an opportunity for local business owners or local marketers. The idea being, so for example, not business owners, but like day trips. So I saw an ad for Universal Studios.
I live in Los Angeles. I think in light of people not traveling large, long distances, while you'll still be in a crowd at Universal Studios, for example, it may be argued that it's a much safer experience to be with a bunch of locals than to be with a bunch of people who are traveling from all over the place. Even though certainly Universal Studios, for example, might have a larger contingent of international travelers.
Internationally, various places around the world are limiting travel. And so, you know, I think, so for example, an article from Business Insider shows that one of Islam's holiest sites in Saudi Arabia banned visitors amid coronavirus fears. So that's, you know, like this is happening all over the world.
There's a company called Bev's, B-E-V-Z, which gives you alcohol delivery to the home, which is certainly interesting and speaks to the ability to communicate with people or buy a product without having to leave the house or talk to people, which again serves many introverts. Apple, according to Daily Mail, Apple tells all its HQ staff, headquarters staff to work from home with immediate effect. So, you know, I think we're, just to me, it feels like we're at a moment where there's change in the marketplace, where I think consumer confidence is going to start to drop.
Lastly, what I'll say is that I was listening to a video from a BMI capital executive. They're a venture capital firm. They're an investment firm.
And then the question was, how will coronavirus affect the U.S. GDP? The person who is being interviewed said that U.S.
Consumers represent two-thirds of the GDP. The U.S. GDP was $19 trillion in 2017, certainly probably a little bit more now since it's 2020.
Probably things have increased since then. And he looks at a couple different buckets. He looks at, like, retail or Costco, Amazon, so digital consuming, digital consumption, and then lifestyle consumption.
Starbucks, Lululemon. The general consensus was consumer buying habits seem to be holding. People are still going to Starbucks.
People are still going to Lululemon. People are not self-quarantining unless they have to or they should. And as a result, it seems like the economy will remain.
But all of this is predicated on whether the marketplace feels that consumers are confident in whether they'll be safe from the coronavirus. So, the interviewee also referenced the 2008 global recession. And what he said is that, you know, leading up to the 2008 global recession or Great Recession, there was an economic, there were indicators for many quarters prior to the 2008 Great Recession that were systemic.
Whereas, by comparison, in 2020, this is a specific issue, the coronavirus, that is not actually indicative of a larger systemic problem. So, his prediction, in fact, is that the coronavirus impact will actually be short. So, that's the impact.
I think from a mindset perspective, I generally don't live my life with fear. At least I try not to. And so, I'm disappointed that South by Southwest got canceled.
I feel for all the event organizers at that event and others, especially the individual or small number, small businesses who are putting on events, are going to be out of events, or small businesses who are going to be out of events. I think we're going to have some economic fallout for the travel industry, which is a shame. But for business owners, there will probably be opportunities to buy over the coming months.
The marketplace, the market is down, which is a buying opportunity. Although no one is calling a bottom, I am certainly not calling a bottom. But when there's change, there's opportunity.
So that's the solace that I see in this change in the marketplace. And finally, brands, business owners, services, products, I think it makes sense to align with an idea of safety, risk aversion, and understanding that customers are really interested in safety and are thinking about safety during their day-to-day travels. So I hope this was helpful.
Best of luck. Talk to you soon.
