Flat Curve – Recession – VC | Learning by Proxy

Every Saturday, I publish this series called ‘Learning by Proxy’. It is a capsule of some of the stuff that I found interesting over the week along with some context to it. I hope you enjoy it.


It is flattening stupid!

Flat Curve

This or many versions of this graph were used to explain what flattening the curve means. Everyone including Barack Obama and Bill Gates shared a graph such as this one on Twitter to explain the world why flattening the curve is important. While everyone including our PM saw the Y-Axis, they all just ignored the X-Axis. Time. It will take much longer to come out of this situation when you flatten the curve.

So questions are now being asked if it was the right thing to shut down the economy. Cases have continued their march upwards and reached more than 30,000. Also, it does not look like the number of cases will fall soon. To add insult to injury, several daily wage workers have ended up dead out of starvation or trying to make a long arduous journey back home – on foot.

India’s lockdown has been the harshest in the world, made worse by the fact that it was accompanied by little planning and foresight. Not only does this cause immense human suffering, it weakens the hand of the Indian state going forward on containment measures. The fact that the Modi government is simultaneously projecting an end to new cases by May 16 and communicating that containment measures will continue for a long time makes it difficult for the states to convince residents to follow those restrictions.


The absence of a finish line is making this worse. 


The government of India seems to think delivery boys running around the city with fresh produce is okay but other goods – not fine. Confederation of All India Traders (CAIT) has been lobbying the government for years to investigate the FDI in e-commerce and several other claims. They have now managed to lobby the government to let only stores sell non-essential goods while keeping e-commerce away. Why? Since the lockdown was sudden and everyone had to re-engineer their work-life and there is a huge demand of electronic goods at the moment and they want to be able to take the first bite into this demand backlog. On the other hand…

Amazon India head Amit Agarwal took to Twitter urging the government to allow them to deliver non-essentials as well as the essential products that they are currently selling. Agarwal said that ecommerce offers the safest way to ensure social distancing, saving lives and livelihoods.


As if to prove the point – CAIT launches an e-commerce portal on 1st May.


America is in Recession

The lockdown in America was not total. People were still allowed to go outside. E-Commerce was still functioning. You could have even gone shopping and dining in some of the states. If you want to get a feel for what two weeks of partial lockdown can do to an economy vis-a-vis 10 weeks of normalcy – which included one week of toilet paper frenzy, well…

Gross domestic product, or the value of all goods and services produced by the economy, shrank at a 4.8 per cent annualised rate in the first three months of the year, according to the preliminary estimate from the Bureau of Economic Analysis published on Wednesday. That marked the steepest drop since the 8.4 per cent contraction at the end of 2008 and compared with economists forecasts for a narrower 4 per cent decline in output.


The economy contracted by 4.8% and estimates range from 20% to 40% contraction for the next quarter. This will be worse than the depression if it gets there.


One of the election promises that Trump had made was to bring “good” Coal jobs back. But, Coal has been dying a slow economic death. Donald Trump has stood by – which is a good thing. Seeing how things have been, utilities themselves are now switching to Wind and Solar. If the first three months of 2020 are anything to go by, there is a bright future ahead.

It has now switched that stance. Renewables are now expected to be America’s top electricity source by 2050. Utilities are opting to jump straight into solar and wind as the falling price of renewables (often paired with batteries) turns them into a viable alternative. Most recently, data collected by the US Federal Energy Regulatory Commission (pdf) shows 86% of new installed capacity at the start of this year came from solar and wind. Natural gas accounted for the rest. (Coal and oil, unsurprisingly, were absent.)


Coal is having it bad across the globe. In India, due to the lockdown power consumption has gone down by almost 20%. I had written about the stress that this is causing to distribution companies in my last blog. But something else is afoot; this has resulted in coal power plants around Delhi getting shuttered. Coal plants once shut down are very hard to revive.

For instance, the CREA report said, “all coal-based power plants in 300 kilometres radius of Delhi (Haryana, Punjab, and Uttar Pradesh) except two units at Dadri Power Plant have been shut down due to low demand.” It emphasised that there has been a “reduction in overall power demand and associated coal consumption by the power generation facilities across the country.” The report compared power generation in India during the two weeks before March 24 (the day of the lockdown) and two weeks after and found a 19% overall reduction in power generation in India. Coal-based power generation in particular reduced by 26% during the same period, said the CREA report.


The article above has some dramatic satellite picture of how pollution has gone down around Delhi as a result. But here in India, we have our own Trump – PM Modi pushes coal, mining reforms with eye on jobs, investment.

Conditional Bailout

The positive effects of the lockdown on the environment is hard to miss. Governments in the European Union are now mulling conditional bailouts. They want to extract a promise from the companies receiving the bailout. Austria has been the country that has made the first proposal of this nature. 

Globally, aviation contributes more than 2% of CO2 emissions, despite the fact that more than 80% of the world’s population doesn’t fly. But its difficulty in decarbonizing, coupled with growth in the developing world, together mean it may reach nearly a quarter of global GHG emissions by the middle of the century.



Inertia is a good thing if it is going your way. Rollback to last December, the American Economy had not known better times. There were three trillion dollar companies on the stock exchange (which there still are – markets are efficient – bah humbug!). Anyway, sometime around last summer some of the largest VC funds in the US went fundraising and they closed their funds during the tumult of the first quarter. They came away with USD 21 Billion. Now, where do they invest?

In the first quarter of this year, 62 venture capital funds raised a total of $21 billion in the U.S., according to data gathered by PitchBook and the National Venture Capital Association. That cash puts them in a strong position as the economy weakens: In 2019, firms raised $51 billion for the full year. As an added buffer, VCs reported a total of $121 billion in committed but unspent capital as of the middle of 2019, the latest numbers available, according to the NVCA.


Their portfolio companies should feel good about themselves.

Retail no more

Since 2014, I have been pitched a business plan repeatedly. Each time it involved some variation of bringing all the main street stores online. The trouble with doing this is not technology or logistics – Its cataloguing availability real-time. Some of the smaller stores don’t have any kind of software. Given what has transpired over the past 2 months, for several of these retailers, especially the single store outlets, the choice is between moving online and perishing. I think this is a once in a generation opportunity. 

The key to remaining viable, Brinkman said, is to be searchable and active online. People everywhere want to be supporting small businesses, but they need to be able to find them. “Many businesses that previously thought of themselves as just local businesses are now able to be global businesses—if they have the right online presence,” she said. “We’re talking to a lot of these organizations that say, ‘Why didn’t we do this before?’”


In the meantime, fresh on the heels of the investment announcement made by Facebook in Jio, they are already piloting ordering over WhatsApp in Mumbai. Will they run away with the market?


No not the ones that retailers are looking to avoid paying. In lucrative markets like New York, San Francisco and Paris, people have been renting tens of houses that they put up on rent on Airbnb. This has resulted in rentals shooting up and making it impossible for many to live in the cities they work in. Many have taken to living out of their cars. In places like Paris, I know friends who travel over 100 Kms to go to work each day.

People who were renting homes for as much as $4000 were making $8000 through Airbnb. Now imagine renting 10 houses and making 10 times as much money. It was called ‘Magic Money’. The money pulled a Houdini on them. The bookings have evaporated and they are staring at huge losses. Well deserved, I say. Unlike big companies in the US, they are not going to be bailed out. 

But the real question is what is this going to mean for Airbnb. A company that was valued at more than some of the largest hotel companies. The listing available on the site will plummet as many of these renters are forced to give up their houses, not being able to cover the cost during the lockdown.


People with spinal injuries often suffer from paralysis. The brain is still in a position to command the limb to move but the neural networks of the damaged spines are often unable to carry the instructions across. What if you find another way to get the instructions across to the limb.

To make it happen, Ganzer and his colleagues used an elaborate setup that connects Burkhart’s brain to a computer. The chip in his motor cortex sends electrical signals through a port in the back of his skull, which is delivered through a cable to a nearby PC. There, a software program decodes the brain signals and separates them into signals corresponding to intended motions and signals corresponding to a sense of touch. The signals representing intended motions are routed to a sleeve of electrodes wrapped around Burkhart’s forearm. The touch signals are routed to a vibration band around his upper arm.



In Newtonian Physics, Momentum is described as the product of mass and velocity. In other words, it is the quantity of motion that a body has. Inertia, on the other hand, is the resistance of a body to change its velocity. Which brings us to Newton’s first law of motion – An object in motion stays in motion till an external force acts upon it. This is often referred to as the law of the inertial state.

Climate also seems to be in an inertial state. If you thought the reduced emission was going to result in lower temperatures this summer, you are in for a surprise. Hottest temperatures recorded in 20 years! Two months will not absolve us of the sins committed over a century. 

How much hotter is it going to get? Global climate models have proved remarkably accurate, and the world is now running closer to those projected by Intergovernmental Panel for Climate Change in 2015. Cities will feel the heat sooner: Temperatures in cities such as Moscow, London, Seattle are expected to shift from temperate to sub-tropical, rising 3.5° C to 6° C above normal, according to 2019 research in PLOS One.



I want to end this with some good news. When I first visited Austria in 2002, I got the opportunity to visit Salzburg. It is a beautiful alpine town known best for the shooting of the movie – The sound of music. Mozart also happens to have been from the city and the city has a musical touch to it. Salzburg developed on the banks of the River Salzach. It was the first river that I had seen where I could see the riverbed. It was pristine. 30 days is all it took to turn Ganga into Salzach.

Not only that, but it is possible to see the Yamuna riverbed also – in Delhi! Some incredible before and after pictures by the Guardian.

Signing off…





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