I sent this memo to all Guerrilla Capital Portfolio CEOs at 10:50PM on Sunday March 8, 2020. I share it now for your benefit. This memo represents my semi-educated, poorly-informed prediction of what is likely to happen over the next 90 days. Read & learn from it at your peril.
Hi Folks,
You probably saw the Sequioa memo. Today, I want to give you a more urgent message: BE VERY AFRAID
Your current level of alarm is not high enough.
In the next 6 weeks, the global economy is going to crash harder than it did in 2008.
By July 2020, global trade will collapse. 100s of thousands of businesses will go out of business. Mass unemployment will occur. Most Americans will fall under military quarantine. Employees will not be able to come to the office. Kids will not be able to attend school. One of your family members will be hospitalized. People you know will die.
Buckle the fuck up.
Bad times are coming.
Before I was a technology entrepreneur, I spent 10 years working as medical professional. I worked as an Emergency Medical Technician in south Los Angeles, received another year’s worth of training, then became a 911 paramedic in New York City.
A lot of you probably have medical doctors in your life. You probably asked them their opinion on Coronavirus. The probably told you “it’s just the flu” and not to worry.
You should not listen to doctors. Here’s why…
Medicine is an incredibly hierarchical culture. Medical Doctors are taught to respect authority. Some 3-letter agency defines a treatment protocol and everyone basically follows it blindly. You don’t get much creativity or original thought in the American healthcare system.
When it comes to infectious disease control, everyone in medicine just listens to the CDC and follows their advice. Period.
Mistakes propagate rapidly throughout this healthcare entire system because, basically, everyone does the same thing.
This is why the Opiate crisis happened. Some research was done, an authority came out and said doctors weren’t treating pain aggressively enough, so suddenly everyone got prescribed painkillers. Then the research changed, authorities changed the protocol and things reversed.
Not a perfect system, but it mostly works as long as science is driving things at the top.
However, infectious disease medicine in the United States is no longer driven by science. American medicine has been politicized by Donald Trump. Trump, not the scientists, decide what the Centers for Disease Control recommends.
The medical establishment is regurgitating the line that “it’s just the flu, NBD” because President Trump is telling them to.
You cannot trust the United States government and you cannot trust doctors, because doctors trust the government.
President Trump is juking the coronavirus stats in an effort to maintain appearances and prevent a recession. Trump knows that a recession would hurt his re-election bid. The President is doing every short-sighted thing he can to pacify the population and prevent fear from spreading throughout the economy.
But fear is warranted.
Coronavirus or COVID-19 or whatever the hell you call it is an extremely infectious disease whose true severity and mortality rate is unknown, but whose spread is growing exponentially throughout in the United States.
What we do know is that––assuming continued mass spread in the United States & Europe––a lot of people will need to be hospitalized. Probably MILLIONS of people all at once.
Just as demand for healthcare is skyrocketing, the supply of healthy medical professionals will shrink as healthcare workers get exposed, sick and quarantined en masse.
America’s hospitals have very little spare capacity. Over the last 3 decades, Private Equity-style financial management has radically transformed America’s healthcare system. On the upside, hospitals have become dramatically more efficient! Underutilized hospitals have been closed and campuses have been consolidated. As a result, America now has very few unused hospital beds. The downside is that the system has no slack contain the coming onslaught.
Having experienced 80 years of peace since World War II, there is no “strategic reserve” of hospital beds in the United States.
Here’s what’s going to happen: The American healthcare system is going to experience a DDOS attack.
A Distributed Denial of Service (DDOS) attack is computer speak for when someone tries to crash a website by flooding it with more traffic than its computers can handle.
In the coming weeks & months, American hospitals are going to be overrun with sick people. All at once. And like a website crashing from too many visitors, the hospitals are going to fail and many of the people in their care will die.
Acts of heroism will abound. Tragedy will proliferate.
There is a reason that China built dozens of hospitals overnight. The Coronavirus––which they imposed draconian measures to contain––caused their hospitals to be flooded with sick people. Hundreds (maybe thousands?) of people have died in the lobbies and courtyards and curbsides of hospitals.
When your mom gets sick, there will probably be no doctor to help her. Hopefully, she doesn’t get too sick. If she does, she may die in a waiting room. Or an outdoor tent. Awaiting a ventilator to sustain her, a doctor to treat her.
You mom might die by herself at home, alone, under quarantine (EDIT: like this woman in Italy).
Germany has 8 hospital beds for every 1000 people, 78% of which are already in use. That leaves 1.76 unused hospitals beds for every 1,000 people. If 10% of the population simultaneously gets coronavirus, and 10% of those people need hospitalization (official estimates say 20% need hospitalization), that means Germany will need 10 hospital beds per 1,000 people, which is 8.24 more beds per thousand than they have right now.
America has 2.7 hospital beds per 1,000, 67% of which are already in use. If 10% of Americans get Coronavirus and 10% of those people need hospitalization, the United States is 9.1 hospital beds per thousand short. That’s 2.9M people without a hospital bed. That’s a lot of dead people.
That’s the DDOS attack that’s coming to a hospital near you.
We are fucked.
The Trump administration’s charade––now encompassing the CDC––may last for another 2 weeks. Already, the disease has spread widely throughout the United States. Due to a lack of testing, we have no idea how widely the disease has spread.
The disease is essentially being allowed to spread unchecked.
Astoundingly, in my hometown of Los Angeles, 27,000 people participated in the LA Marathon today. Thousands runners are now infected. A few dozen will get sick. Many, many more will carry the disease and spread it to parts far & wide throughout the country.
Over the next 2-3 weeks, we will see continued exponential growth of new confirmed cases and new hospitalizations.
By April, you will see reports of American hospitals that are overrun with patients and unable to accept new cases. Trump’s dam of bullshit will burst and the scary truth will become clear to all. Schools will close nationwide. The economy will grind to a halt.
By May, the American healthcare system itself will be overrun and the US Military will be called upon to build field hospitals en masse. Your mom will get sick and won’t have anyplace to go.
By June, the US Military will be a familiar presence in your day-to-day life. Food shortages will be a thing.
Where things go from there, I do not know. The future is not yet written. I hope desperately that I’m wrong. I hope that competency will strike our government.
But I think a lot of people are going to die.
Hopefully not your mom or dad or grandpa or grandma. Hopefully not you. But anything can happen.
Preparation now, before the calamity is obvious, may be the difference between the survival of your family and your business.
Come up with a plan. Perhaps a radical plan.
Raise capital. Buy food. Isolate yourself. Consider making layoffs. Consider a crazy pivot. Consider crazy ideas. I don’t know what the great pandemic of 2020 will mean for your and your business.
But for most of you, 2020 will be worse than 2009.
Amidst this chaos, there will be tremendous opportunity. Struggling businesses will try products from startups that offer them the hope to survive. Lonely, isolated and undersexed consumers will adopt products that entertain them, that feed them, that connect them.
Whole industries will fall in 2020. And new empires will be built. As in wartime, destruction will beget creativity.
Be creative. Be bold. Be a survivor.
Play fucking offense.
Because there is no safety right now.
-Matt
