Presenters: Ed Whitelaw, Professor Emeritus of Economics, University of Oregon; Kristin Luck, Founder & Managing Partner, ScaleHouse;
Tyler McMullen, President, MarketVision Research; Melanie Courtright, CEO, Insights Association (Moderator)
Transcript Courtesy of Focus Forward & FF Transcription
Melanie Courtright: Hello to everyone who's joined us so far. Thank you very much. We'll probably continue to have people join us but we have a very full agenda so I want to get started. A few pieces of housekeeping for you. First, a quick disclaimer. You guys who have joined me before know what I'm about to say. The information we share today is not intended to substitute for legal or financial advice. If you need legal or financial advice, we encourage you to reach out to us if you need a connection or reach out to your advisors. We are recording the town hall of course and we'll make sure to post that and make it available to you very quickly. Thank you to Focus Forward who's been transcribing these for us so we'll have a transcription available. We would love to hear from you today if you see the Q&A chat pod. There's a chat pod and a Q&A pod. The Q&A pod is for private messages and the chat pod is for public messages. You can use both, either, use them in tandem. We'll be sure to respond. We're gonna leave plenty of time at the end for open discussion. We already have some questions that have come in through the registration process so we'll be touching on those at the end. If we don't get to your question, then of course we will do our very best to follow up with you afterwards. So with that, I am going to go ahead and get started. I'd like to first introduce our first speaker, Ed Whitelaw. Ed is a Professor Emeritus of Economics at the University of Oregon. He specializes in the economics of cities and regions, labor and poverty, the environment and natural resources and the economic consequences of policy decisions. As an expert witness, he's testified in matters before state and federal courts in the NAFTA tribunal. Ed's gonna share with us a perspective on how to think about economics in this world today. So with that, I'll pass it off to Ed.
Ed Whitelaw: OK, so let me just tell you what you already know. Namely all of you and I don't share the same language so I'm going to step through my remarks and many, perhaps most of you know some of these terms but I want to make sure we have those in common as I move through this. So you'll see on this slide three points. First, U.S. business cycles and these come from the National Bureau of Economic Research and the committee that deals with business cycles meets regularly. A couple of my classmates from graduate school have served on the committee. So notice at the top of the three bullets there have been 11 full cycles between 1945 and through 2009. The mean, that is to say average cycle length for that duration is 6.27 months. The most recent contraction alone, and remember a cycle has both a contraction and an expansion, the most recent which most of you suffered in one way or another, the contraction alone was 18 months and notice the period of time and now I want to contrast that with the duration of U.S. social distancing. So the forecast is three to five months, over and over again, repeated until a vaccine is available and most of the estimates say that will be 12-18 months. And I've got the footnote underneath there, I won't read it off, but one thing I want to emphasize is the terms uncertainty. And in the title to this presentation, I talk about the U.S. struggling through COVID-19 uncertainties. Most people regard risk and uncertainty as synonyms. They aren't in economics and a number of other fields. Risk takes the form of a probability, P, times an event, and so you get probability times some event. If you put dollars on it you get a dollar value associated with that risk. Think of uncertainty as taking the same arithmetic or multiplicative form price times some event but in the case of COVID, especially COVID-19, we don't know the probability and so when we're talking about 12-18 months or three to five months over and over again, we're guessing that zero or question mark times the event is unknown. Dr. Fauci has made that point frequently. So let's go on to the next slide. OK, now, this will take a little time. Be patient. So I'm gonna talk about economic growth and there are two definitions. First there's an increase in actual total output, GDP. That fluctuates typically if you go over to the figure on the left that we cobbled together, the wavy line is a cycle in effect, a series of cycles. What I want to focus on, though, is the second of the definitions, namely an increase in maximum possible total output. That's if all inputs, forms of capital, are employed and employed at the edge of the technological status of the country, that's, if you go over to the left, that's the dotted straight line. I'll explain the shift in a moment. But assume that that's the maximum possible, and I've put on the vertical axis, that's production and I've standardized it with population in the denominator, so think of it GDP per capita. So what I've got then right under the large font, economic growth, second definition, this is a concept that probably, well one of my heroes published in an article in 1956, Robert Solow, and what's there is the little f, I'll come back to that, and those four forms of capital I've defined, I won't read them all, the two that I want to focus on are human capital which is education and training and social capital, not that the others aren't relevant but in the context of COVID-19 they are vulnerable. So if you go over to that figure on the top, I'm going to address the impact of decreased human capital, K through graduate school for that matter, that's taking a big hit. If you assume that big hit occurs just in an instant and is felt, then the capacity of the growth, the maximum possible, shifts down vertically so you get a downward shift. If, on the other hand, it sort of seeps in over a period of time then you get a downward slope and, in fact, we get both of them. So think of that capacity, not the utilization of it. The utilization of it is the wavy line. But you get that, either a shift down, downward slope or both and you've got serious problems in the economy. I want to focus on two things. One, social capital. When you're talking about social capital, this is the definition from The World Bank and it came a year after the chief economist, a guy name Joe Stiglitz, one of my classmates in graduate school, had been the chief economist and he had some influence over the then existing definition of social capital. But what he had an effect on is the phrasing that's quite key to this and then the line, "the institutions in which they are embedded" and those are taking a hit, social distancing does it, our current administration has had its effect on it, and the little f, the function of the explanation along with technical change, that is also taking a hit as for many firms, many cities, many states the capacity for production is taking a hit and so you get that shift down of capacity or a downward slope of capacity and that is a big time hit. Now, just as an aside, the definition of human capital – and we'll have footnotes and sources available for Insights Association to distribute should you want it. The human capital, that definition came from Paul Samuelson and Bill Nordhaus. Nordhaus and I took micro from Samuelson decades ago and they're both Nobel Prizes in economics and among the heroes I've accumulated over the years. So now I want to move to the next slide. So over the last say 30 or 40 years, maybe longer, cities have grown to becoming innovation hubs. That's one of the terms, it's not a term of ours but people use that many times to identify cities and distinguish among them. Cities are centers of innovation because they facilitate knowledge spillovers and so on. The key there is as cities focus on innovation and their comparative advantage in innovation have increased, the centers have become more dense which is to say more smart people bumping into themselves more frequently. So there's a causal chain here that's very important; collaboration facilitates innovation, increased innovation increases productivity. Productivity in this case is labor productivity, namely output GDP per capita. So if we, through social distancing disadvantage many firms, and of course many are advantaged, but as that happens over time, we will have difficulty coping with that until we develop through innovation no doubt and technology, we develop gimmicks, devices, computers or whatever that will help compensate for the distancing. And that's the end of my remarks.
Melanie Courtright: Ed, thank you. A really quick question for you, backing up a slide. When you and I spoke, one of the things you talked about in the second definition of economic growth being a function of maximum output from human physical, natural, and social capital, we said that certainly the COVID pandemic has affected human capital, it has affected social capital as you mentioned, but it's also affecting physical capital with the reduction of human-made goods as factories are closing and people are working from home if they can work from home. So is it fair to say that with all of these being affected and steeply over a period of three months or so and maybe reoccurring that that is going to create what you're seeing as that second line of reduced economic contraction and we don't know yet how long it'll take to rebound.
Ed Whitelaw: Absolutely. Typically, so think of the physical capital, it's not goods, rather, it's human-made things and I've listed some of them here, human-made things in which we are, in effect, disinvesting. And of course we already have done quite a bit of that for quite a while. Think bridges, think water systems. For example, Flint, Michigan, and so on. As you incorporate that, yes, that is shifting that horizontal line down or sloping it down. Let me just say so clearly there are errors of omission I have committed all the way through here so I purposefully downgraded physical capital and natural capital just because these others, human capital and social capital, are having a much bigger effect on our economy.
Melanie Courtright: And then conversely we won't see economic growth return until such time as we've recovered from all of the hits on the capitals? Right?
Ed Whitelaw: Yes, good point. So we're in contraction if you're thinking about the short-term fluctuations of business cycles. We hope to get to an expansion side of the cycles and at the same time we'd like to not only catch up or compensate for the hits in human capital and social capital but we hope we can move beyond that and we won't see that for quite a while. By quite a while I mean longer than a couple of years. It takes a while to come back.
Melanie Courtright: Thank you. I know that some of you have questions and we'll come back to that. There's one here I see here from Michelle. We'll come back to these in just a moment. Next, I'd like to introduce my good friend, Kristin Luck. I know many of you know her. Kristen's the founder and managing partner of ScaleHouse Consulting. Let me move this to her beautiful picture. Sorry, there we go. All at once. Perfect. There we go. And Kristin served as an advisor and growth strategist to a number of cutting edge marketing and analytics, technology and service firms. She's the founder of two marketing analytics companies that have led to successful exists. Kristin is a licensed investment banker with Oberon Securities and a founder focusing on helping fellow founders and executive teams scale and monetize their businesses. Kristin, tell us what you're seeing in the financial sector.
Kristin Luck: I'm gonna be speaking about things from an investment banking standpoint but before I do, I just want to fanboy Ed a little bit because he keeps talking about his economic heroes but he's actually one of mine and he's not only the former head of economics department at the University of Oregon which is my alma mater, but he's also the father of my college roommate and he lives right down the street from me. So thank you, Ed, for participating today. I think this is the first time we've ever had two panelists from Tumalo, Oregon, on a webinar. We are as socially distanced as you can get out here. So thanks Ed. So from an investment banking perspective and I'm gonna be talking about private markets, not the stock market although I know that's of great interest to lots of folks. While better capitalized than ever, obviously private markets aren't immune. We typically see lags between public market valuation moves and adjustments for private market funds so I'm talking about private equity there. And a drop off in the stock prices may or may not have a ripple effect on PE depending on the underlying driver of that move. But a decline in the earnings profiles of those companies aren't immune to the negative economic pressures that public companies face. I think that PE is really equipped to alleviate pressures but it will also certainly be challenged. PE tends to be a GDP linked business, so as consumers spending a business investment are set to decline, I believe we'll undoubtedly see a slowdown in PE transaction volume to follow the expected economic contraction that Ed just talked about. I do think that tighter credit markets will force adjusted transaction capital structures which creates private debt and special situation opportunities and I know Mel's gonna talk about the CARES Act in a few minutes which is of great interest, I think, to a lot of small business owners. In terms of venture capital, many name brand VC firms also seem prime to benefit from the current environment. At Oberon, we sort of predicted that VC fundraising would remain strong coming into 2020 and it has been so far. And several prominent firms have high targets for open funds. I think there's a lot of LPs that are under allocated to VC, which is good, and the relatively small size it represents in portfolios so it seems like VC fundraising in aggregate should be pretty resilient which is good news to some of the early stage firms that I work with that are trying to fund raise right now. I think the main headwind for VC fundraising right now is just the prolonged hiatus for in person meetings. Lots of VCs when they're making investments, obviously they want to meet the founders in person. They want to see your business and we're just not able to do in person meetings right now and so that could delay some of that approval process. To end on a really positive note, I will say that for both PE and VC firms, dry powder levels we call them or basically the capital they have to invest are at record levels on an absolute basis. But more reasonable when compared to recent investment activity which is also at all-time highs and this capital is really likely to be deployed. It might be more slowly and more prudently than in the last few years based on some of the factors that I just mentioned but the fact of the matter is if there are professional investors, and I mean that as opposed to high net worth individual investors, then investing is really their job. They have funds raised and in order for them to make money they have to deploy funds, so I believe deals will continue to get done and we are actively both curating and closing deals at Oberon so we still remain relatively bullish on M&A activity.
Melanie Courtright: Great. What about resources for small businesses and I'll put this really quick note up on the CARES Act. As a note to everyone that you should continue to visit the resource page at theinsightsassociation.org there's a link to the Coronavirus and this brand new table and there's a lot more to it than what I've shown you here on the CARES Act is there and Kristin sent me this this morning and then we quickly loaded it into this presentation and onto the site. Go ahead Kristin.
Kristin Luck: It's a really good summary. I think the challenge for a lot of small businesses is that they can't get the funds soon enough. That's the biggest challenge. I think that the good thing that I see here, and a lot of the things about the CARES Act is the loan duration and amount, and that unsecured loans are available, so you don’t have to put up any personal collateral or have collateral in order to get them. The loan forgiveness, I think is really important. And I think – a lot of the conversations that I'm having with founders right now are just how to bridge this interim gap between having a decline in business and then when you can actually get funds through this program. And I think that there's a couple of quick things that you can do. One is before you do layoffs, I would really speak to an employment attorney about the benefits of furloughing people rather than laying them off, particularly since I do remain bullish on the industry at large. And I do think that we're going to run into situations where people let people go and then they need to hire them back rather quickly, and so furloughing is a great opportunity for them and also has some real benefits. And then the second is, for companies that have a line of credit, I am seeing firms getting their line of credits pulled rather quickly, just because of the economic environment. And so if you have the opportunity to tap in and pull money out now so that you can bank it in the event that you need it, I think that's a really good move. I always hope for the best and prepare for the worst.
Melanie Courtright: One more slide here on the – there is also on the website, some employer and employee resources and even posters that have started to come out about – to help you with ways to explain things to your employees about what their rights are. Before I move on to Tyler, Kristin, what one or two best pieces of advice you have for companies in crisis.
Kristin Luck: I think the first is that decisiveness is really key, and taking look at the actual financial state of your company. Do you have enough cash to survive? Should you reassess your sales forecasts? If the economy continues to recede, will you be prepared to make appropriate business changes? And the best defense is offense, so be prepared to make tough decisions early. I think I've been pretty honest about the fact that I as well as many members of my family suffer with terrible anxiety, and mine particularly kicks in when I have to make tough decisions. So coming up with plans early and having an understanding of the triggers that would make those plans go into action, I think, is particularly important. One of the best pieces of advice that I've received ever was that action brings relief, and I find that any movement is better than stasis. And I think that comes out at odds with – I've seen some pieces of advice go around of like, don't do anything right now, just wait and see how things are going to fall out. And yes, of course, you want to be strategic about the actions that you're taking, but this is not a time to sit back and wait for the phone to ring.
Melanie Courtright: Thank you. I have a couple more questions for you that we'll come back to at the end. But next, I'd like to move on to Tyler McMullen. Tyler, thank you for being here. Tyler has served as president of MarketVision Research for the past two decades. Headquartered in Cincinnati and founded in 1983, it's one of the largest firms in the U.S. Tyler, can you tell us what you're seeing in and around your business? What's it like in the agency world right now?
Tyler McMullen: Sure. For us right now, we're busy. So we're very thankful that. The first couple of months of the year we had very good project flow, good pipeline, so everybody is busy. And we're remote now, so everybody's working from home, for the most part, and so it's obviously challenging. So I guess on one notion, from one perspective, we're very busy, and that's a great thing. But there are challenges that go with it, of getting everything done.
Melanie Courtright: And then how was the cancellation and postponement space for you? Go ahead.
Tyler McMullen: In terms of things that we're doing now and looking at, certainly one of them is that, is just looking at all of our projects, and looking at in terms of, what's been canceled. And we've only had a couple of things canceled, and those made sense for us, so we've not had much of that. And then looking at ones that are postponed of any type, and we've had a number of those. And some of those are client-driven, some of those we recommended that at least for the data collection phase based on what's going on. But working hand in hand with clients, a lot of discussions with clients to figure out what makes sense. So that’s certainly one metric, is, evaluating all of our projects that are processed and where they are and what's happening. We're very sensitive to that. I think the other thing that we're certainly looking at, I mentioned everybody working from home, is just employee health. And I don’t just necessarily mean physical health, but emotional, mental health, all of those types of things. We try to make it that we're checking in with each other with regard to projects and clients and things like that, but the first thing we're interested in is how are they doing? This is inconvenient, frustrating, but it's also – it creates a lot of anxiety, general anxiety for employees and our partners, and I think we're – so that has to stay foremost in our minds.
Melanie Courtright: A few of the questions that we've gotten so far are about doing research in general. What's your point of view? What advice is MarketVision – how are things looking from what you should be doing and what you shouldn't be doing? What's your point of view on, should we be doing research right now and what kind of research?
Tyler McMullen: Well, first of all, for us, from a research perspective, at one level we say is business as usual, we're continuing to conduct research. And the Insights Association, you put out something, I think it was last Friday, that said the same thing. Research continues, and it should continue. So the advice that we give is that it depends. Obviously, we're – there is irregular behavior right now. And if that irregular behavior, if you believe that that is going to impact the questions you're asking, the things that you want to know, and the data that you're going to collect, then you should think twice. And so there are certain – and so it very much depends on what your objectives are, what you're trying to answer, and then act accordingly. And so there are some things that we've jointly decided with the client that we press ahead on, and there are some things where we're going to hold off on data collection.
Melanie Courtright: Is it fair to say if you believe it will affect your questions and you believe that that is temporary – because what we don't know is, some of the things that are changing may end up being permanent changes. Some of the sentiment that's shifting may not rebound and so, sort of, learn through it and only if you really think it's a temporary shift that will evaporate and go back, should – what do you think of that? That's been a point of view that's been shared.
Tyler McMullen: That’s the big question, is that, once this ends at some sort – does it really end, what changes? What changes in the longer term, not the short term? But some of these things are going to go back to normal and some things are not and how are they going to change? And so there are a number of those I mentioned in terms of, where we're delaying data collection, you're going to end up having discussions about, should we be tweaking this? Should we be – do the objectives change a little bit? Might we add some other questions or change the design in some way? So yes, that is a big part of it.
Kristin Luck: Mel, can I chime in there?
Melanie Courtright: Of course.
Kristin Luck: I think I've been – obviously, I've talked to a fair number of people that are on the brand or client-side of the business. And I think, one of the things that I'd advise is that really soon, key stakeholders and executive teams are going to move past the immediate crisis and they're going to start formulating strategies for what comes next. And so the question is, are you going to be ready with the data that you need to help formulate those plans? That's one of the things I'm trying to emphasize. And I also think, to Tyler's point, I think this is the time to get really strategic with research. In the past, we've been looked at as data collectors and we're not able to compete with big consulting like the McKinseys and BCGs of the world. If you're getting a project canceled for some reason, that's a real opportunity to look strategically at how you can add to the business, maybe you can pivot that project to something else. Don't even look at it from a project perspective, but like, how can you be most helpful to your clients during this period of massive disruption? And I think that more strategic thinking [AUDIO SKIPS] are going to be the big winners at the end of the day.
Tyler McMullen: I certainly agree with that. I said I agree with that. If you look at your business with your clients, these are relationships and you should be having these discussions. And again, it's not about projects or questions that you're answering today or tomorrow.
Melanie Courtright: I see a comment from Steven, too. It says research can help brands stay close to their customers, and panel participation rates are actually up right now. I've heard that – I've been talking with all of our members, and nearly every respondent/participant supply firm is a member. And so, all of them have said that their response rates are holding. And I think that there's a couple of reasons for that, like, people have a bit more time on their hands, certainly, as they're at home. But also, I think people are eager to talk because they are emotional about everything that's been going on around them.
Kristin Luck: This is the first time ever that we've had a totally captive audience.
Melanie Courtright: It's true. It's true.
Tyler McMullen: We would say that it is, yeah, that's very positive and that makes it – but I would say is also a reason to be very careful with sample balancing because it's a matter of, response rates are up, but among who? It may not be across the board, and so I think we need to pay more attention to that area.
Melanie Courtright: We have one comment here that it would be great to hear from a corporate researcher, and we have that in our plan. But just to – really quickly, I wanted to go through some of the COVID member survey results with everyone. And there are, I believe the number now is 60, 61 corporates who participated in this, and we've broken out their responses separately for this. So this is the survey that the Insights Association put out. We're planning to run this again and run it a few times as the situation evolves. Right now we're seeing a forecast coming down and I hope to use it as a barometer for when forecasts and pipelines start to return. What you'll see here is a plot of the corporate world versus the full-service agencies and the data collection agencies for reporting of work canceled and then, obviously, the resulting long term impact or concern for viability. We see less cancellation and therefore, less long term concern on the corporate side. The agencies sitting in the middle, seeing some cancellation and therefore, more long term concern. And the data collection agencies being hit the hardest. Now, when we dig deeper into that, you'll see that it is really affecting qualitative more than quantitative. And you'll see 39% of data collection agencies with greater than 20% of work canceled, and then 47% if the company is a mostly qualitative shop. And then we asked a question because some of our members had asked us to, about cancellation policies. 95% of agencies are being very flexible with their cancellation policies, believing that now is not the time to try to force cancellation policies on companies that are trying to simply survive this process, and hoping that the work will come back. So then for those, the online and – the qual work that is canceling, how much of the work are you trying to move online? There's a chunk that are trying to move it online. 31% say they're moving more than 80% of their in-person to online. There's about 38%, though, that say that less than 20% of their work that was in-person is being moved online. But there is quite a bit moving online because of the online offerings, that's where our industry is the most healthy at the moment. Quant software and analytics firms report steady to growing pipelines, 39% steady growing pipeline. So then we asked about postponement. So that was cancellation, this is postponement. Here you see a different story, but a story that still affects cash flow and affects the ability to make salary and rent. You see 49% of corporate researchers saying that more than 20% of their work is being postponed. And then mostly, again, hitting more qual with 54% of the people saying that their work is being – more than 20% of their work is being postponed. And so a final slide here looking ahead, agencies are going to feel the impact more heavily than the corporate members because of that, this is their bread and butter. This is where all their revenue comes from. And so you see the corporate saying that there might be a – 4% are saying a dramatic decline, 28% saying some decline, and 7% saying some growth actually, to Kristin's point about using this opportunity to perhaps do something new and different and strategic, learn more and follow along. Whereas the agencies and data collection companies are seeing 47% a large decline, or 30% of the agency level, a large decline. Nearly three in four full-service and data collection agencies are facing a future with light pipelines right now, and we know that the pipeline is the heart-blood of the forecasting. And so I want to give you guys an opportunity really quickly – first, let me thank – please let me thank Quester, Infotools, and Gongos for helping us with this survey programming and analyses reporting. Thank you all very much. I want to give you guys, Tyler and Kristin, an opportunity to react to this data. Anything that you would add to the interpretation of this data?
Tyler McMullen: One thing I would say is just the – I think some of this goes to visibility. We're all trying to manage in an area where – at a time when there's not much visibility. We learn something new every day, but there's only limited visibility. And as I was thinking about this, is that, from a corporate side, you might have the most visibility and all the way from a data collection, perhaps the least visibility at least today.
Melanie Courtright: So to that extent, it's heartening to me to see that the corporates don't believe there's going to be a dramatic decline in number of planned studies, maybe some pushing, maybe some reallocation. But I'm heartened to not see such a large number of large declines planned by the corporates because that means it should trickle to the agencies. The agencies may not be seeing it yet and their pipeline looks light and so they're naturally concerned, but it's – the corporates are not planning such a large decline at this time. Kristin?
Kristin Luck: I would say one of the messages here for the corporate folks who are on this call today, and I know that there's at least a few of you, is, I wanted to just reiterate the message of let's really display financial responsibility in the industry right now. There are many folks in the ecosystem that are comprised of individuals and smaller companies that just do not have the financial resilience to survive for an extended period of time without work. And so I would say I think it's important for all of us, clients, agencies, suppliers, to work together and responsibly during these times. And think of ways, before you cancel projects, to adopt them or adapt them into online methods. And I also think, to really think hard about your payment terms and the impact on suppliers, even – I know so many suppliers, and Tyler maybe you can echo this as well, there's many big brands that have 120 day or longer payment terms, and they're not even paying within those timeframes. And that's just going to be the death knell for a lot of people in this industry right now, and so I think paying attention to that is really, really important. The same thing with looking at methods – and I did see this question from somebody in the chat, but I think anything you can do to pivot to online methods, again, if you're a data collection firm is a big deal right now.
Melanie Courtright: To that point, there is a free webinar next week on the 31st that we're putting out for people who are wanting to learn about moving offline, in-person work to online, what the options – what the opportunities are, as well as what are some of the things you need to watch out for. Jason Saylor put in the chatbox, about call center work. Let's talk about that for a second. Call center work, contact rates and response rates have been extremely high, seeing that on the national level. Last week, we had someone who spoke about what they're doing at their call center. Call center work is especially – is important and at the same time, often, call centers, they sit close to each other, and they share desks and share the equipment. And so one of the things some of our members have talked about is social distancing within the call center, assigned headsets within the call center so that they have their own headset. And so, call center response rates are also very high. Again, people wanting to feel connected. But those companies that have been able to quickly evolve and migrate their space and their equipment and their policies are being able to run their centers and keep people on the phones.
Kristin Luck: Mel, can I just jump in and add something there too? Which is, one of the things I'm encouraging clients to do is that, if you're used to face-to-face and you don't have online methods, what I'm really encouraging people to do is to look quickly at what strategic partnerships you can form with folks that do have those capabilities. And I'm even seeing great examples of collaboration among competitors right now. I'm this big advocate for competitive collaboration anyway, which is important because I think a rising tide lifts all boats. It helps people that have the technology and it helps people that don't have the technology. So I would say keep an open mind, be open to partnerships. Priscilla McKinney has this saying, Always Be Helping, instead of, Always Be Closing, which – I love that line, and I think that this is a time where we really need to connect as an industry and help each other out.
Tyler McMullen: And I would just add, I would agree and say, and as I mentioned this is the time where we all have limited visibility, just talk to people in the industry. I've spent a lot of time talking to others running full-service research companies, all of our data collection partners, I had conversations with them. And it's amazing what you can learn because everybody sees things a little – everybody's a little different, everybody has a little bit different client portfolio. And we have to be very mindful that there are some – for us corporate, corporations, some are doing very well, and some are doing terribly. And so they're all different. They're not all – this isn't impacting them all the same from any perspective. But just have those conversations. It's a tremendous – I think for a lot of you, you'll find it support, guidance, and just general information.
Melanie Courtright: So let me move into Q&A, a lot of really great questions. This first one is for Ed, and there's a second one that's tied to it that brings Tyler into it and Kristin as well. Ed, with the cycles and the social distancing estimates from the past, would you say that those estimates are true regardless of country or economic? Or does the cycle and social distancing timelines vary by country?
Ed Whitelaw: Typically, the differences would arise from different patterns of comparative advantage, the nature of the composition of GDP, that kind of thing. With the U.S., it is such a broadly spread out GDP that – I guess I have two reactions. One is, gee, it's good that we're so diversified. The other is, if Fauci and those estimates are anywhere near accurate, and if the timeline for development of vaccines is in fact 18 months, then that spread – and if we also remain so short-changed on ventilators and masks and all of that, I don't think we've yet – we, collectively, and certainly high up in our administration, have fully grokked – you know that term? Some of you do, I think, from the 60s, what the hell's going on and how long and how deeply this will affect our four forms of capital. So it differs from country to country, in part because other countries have moved fast. We haven't.
Melanie Courtright: Kristin, were you going to say something?
Kristin Luck: Yeah, because I literally just got back from being overseas for a month. I was actually in Greece when they locked down the country and started quarantining everyone, and that was weeks ago. They shut down schools three weeks ago and everybody was instructed to stay inside. There's even drones that are flying overhead telling people to go home if you're outside. And I think that that early lockdown – like if you – Kim Harrison told me the name of this website last night, and now for the life of me, I can't remember it. But you can go on it basically and look at what the infection and death rates are, not only by country, but by state. And if you look at Greece as compared to Italy – for instance, Greece has less infections right now than New York or pretty much almost any state in the U.S. right now. Incredibly low because they've taken early action. And I think I would say to anybody who's listening to this right now, if you're not in a state where you're socially distancing or required to stay at home right now, I would take this extremely seriously and stay home and start socially distancing now. It's not to be taken lightly.
Ed Whitelaw: Unequivocally.
Melanie Courtright: And then Chris Robson's [ph] is – to bring in this concept of the cycles and how long it might take, Chris Robson adds, for this particular shift from offline to online, it's a structural change. It's a methodology change, it's a structural change. There's security implications and there's learning curves around moving it online. It's a structural change, so does that mean the recovery is likely to take longer?
Ed Whitelaw: Longer than what? That it will last longer than what we imagined?
Melanie Courtright: Well, I thought – that's a fair question.
Ed Whitelaw: That's if – yes, it will take longer –
Melanie Courtright: Longer than if it wasn't a structural change.
Ed Whitelaw: Right. Of course. A structural change means long term.
Melanie Courtright: Exactly right. I think that was Chris's point. A question for Tyler. Noticing any particular type of research, study types, verticals that are driving projects, cancellations?
Tyler McMullen: No, just a big thing, just a movement online. There's a number of things that we've moved to online in some form. There's a number of things with – this has been a good fit for shorter online communities, we call them pop-ups, where you can – it works out well where you can run it for whether it's a week to a couple of months. But that's generally the one. By the way, Ed has me scared now.
Melanie Courtright: That's a good question, though.
Ed Whitelaw: That’s what our grandkids tell us.
Melanie Courtright: But we're getting ready to re-field, and we're making some changes based on some strong feedback we got. We're getting ready to re-field, but I think it's a good question to ask among the canceled and among the postponed to see if we can tease out the what is being – beyond just in-person, of course, but what else is being – what other types? Because we have a lot of questions about, is manufacturing being affected more? We'll try to add some questions to tease out the whats. Question for Kristin. For the small business loans, beyond limiting liability to cut staff and – what other limits are there? They're an LLC and need to take a distribution to pay taxes on last year's earnings, would that be allowed?
Kristin Luck: I've got my little CARES Act cheat sheet that I got from UBS. UBS have this – I think, Mel, you're posting on the Insights Association website now.
Melanie Courtright: Yes.
Kristin Luck: It's just a really nice summary, I think, of the CARES Act overall. I think that there are – for small business interruption loans which most people in Insights Association are going to qualify for, you have to have fewer than 500 employees and meet some standard size requirements. The loan duration and amount is a maximum maturity of ten years and the amount to the lesser of 10 million, or 2.5 multiplied by the average total monthly payments by the applicant for payroll, mortgage payments, rent payments, and payments on any other debt obligations incurred during the one-year period before the date on which the loan is made. Rather than having me read through this entire chart, I would say go on to the IA website after this and download that guide. And then if you have questions about it – and I say this not only for myself but for also Jackie and Mike who are both on this webinar today, who are my partners at ScaleHouse. We're doing free, totally free, like, if you'd want us to talk about something, shoot us an email. We're happy to have hour-long chats with any C-level folks or founders about how to manage business interruption. I've been through this multiple times and survived 9/11 and the dot-com crash and the 2007 through 2009 business disruption. So I've been through it before, and we're happy to help with strategies there. I also want to say because I didn't know the name of that website because – Kim Harrison is attached to my left hip and just texted me the website. It's on google.org, and it's just a coronavirus map. And then Lisa – let's see, somebody else also posted there's one at John Hopkins University too, which is a great map. Lisa Cortez, John Hopkins, coronavirus.jhu.edu is another great map to track outbreaks.
Melanie Courtright: And we've got some – coming back to the corporate thing for a second, Michelle is saying if it help – we had one person say, do we believe that the researchers in the corporate and the end client researchers yet understand how much their budgets will be cut? Of course, that always depends on the strategic value of the research and how the business is doing. And so do they – do we understand how the economy is going to go – do overall? Not yet. And so, do we fully understand how their budgets are going to go? Of course not. And yet Michelle Gansle says, if it helps, Mars is planning to resume online research in China starting in April, which means that hopefully the rest of the world only a month or two behind that. And so we've had a few questions, requests. I think it might make sense in one of our next town halls to do a corporate, a brand researcher's perspective, help people understand. Although not to put them too much on the hot seat, but we'll try to put that together for everyone.
Kristin Luck: Mel, I also think that there's a lot of categories going through tremendous growth right now. Fast-moving consumer goods certainly is one of them. Gosh, I would love to be in the toilet paper business right now, it seems like that's gold. Digital technologies that are helping us mitigate a lot of the business interruption. Anything that's around enabling remote enterprises to video solutions like this one, like Zoom, I'm sure will get going gangbusters now. Anything that is related to the at-home consumer. Food delivery technologies, you can see how Uber has pivoted to Uber Eats. Digital health, there's a lot of category growth going on. And so anything around health and wellness, people trying to stay healthy and being contained at home. So, I do think that there are still tremendous growth opportunities for categories and for research.
Melanie Courtright: Ed, a couple of questions for you. And you and I talked about this, and so if you – I have a feeling you're going to say, we can't predict this, but enough people have asked me the question that I still feel the need to hear them – have them hear me pose it to you. Are there any estimates that say when we think that we will at least stop contracting and begin expanding again? Are there any estimates, short term, mid-term, long term, that anyone is using around the impact of this yet?
Ed Whitelaw: Well, let me – I'll have two answers. One is, yes, there are quite a few of them out there and then as you peel back the onion, you find that they have not taken seriously the uncertainties. And remember the definition I gave you is – the term is stochastic, that didn't help this exchange, but there are – when there is this much uncertainty, the more confident of the forecasts, the more suspicious they are simply because there is so much uncertainty, we don't know timing, we don't know magnitude. And if you don't have answers to those two questions, you're pretty much just groping. So there are estimates out there. The more confidently that they are expressed, the more suspicious they should be.
Kristin Luck: I would also say that if you want this cycle to end as quickly as possible, stay home.
Ed Whitelaw: What's surprising and frustrating and so disappointing is most of us have believed what's going on in South Korea, or in the other countries that have managed to lock down. Cuomo had this great metaphor of, you turn down the leak, you keep turning it down. And he said, screw it, I'm just gonna close it down completely, and that's the only thing that New York can do.
Kristin Luck: And Mel, since we've been on this call, the CARES Act has officially passed.
Melanie Courtright: Awesome. Thank you. Thank you for that. So those of you – I did get a question, where do I find these resources? A couple of people maybe have hit the Insights Association page and not been able to find them. So, insightsassociation.org, and if you scroll down just below the picture in blue letters or aqua letters, teal, it says Coronavirus Information and Resources. You click on that Coronavirus Information and Resources, and then there is a full set of bullets underneath the word resources. And there's one, the fifth bullet says Coronavirus Relief Resources, it's that table. It's the fifth one, and it says from UBS. There's also one from the Small Business Administration, one from the US Department of Labor, the Small Business Grants Program. If you have not been to the website, insightsassociation.org and clicked on our resources, please do that. And if you can't find it, I really hope you'll just email me firstname.lastname@example.org. A few really quick notes for everyone. The next conference, we wanted to let you know that it is online. It's our very first truly virtual conference. We're excited about that, and we hope that everyone on this call will support that event because it's important to the association. And again, we will continue to do these. Next week, we're going to have Howard, who is going to talk specifics about the CARES Act. We're also going to talk about – many of you have said, how should we be thinking about consumer sentiment? How is sentiment changing and how might the data change? We're going to have some really good speakers on the changing face of consumer sentiment and what might be short, mid and long-term changes there. And I thank everyone for their time today. This has been really good. Again, we will transcribe and post the recording. And if you need the Insights Association, we are here for you. Thank you very much, Ed. Thanks, Kristin. Thanks, Tyler.
Tyler McMullen: Thank you.
Melanie Courtright: Thank you.
Ed Whitelaw: Thank you.
Melanie Courtright: I know that you can reach out to any of them if you'd like to as well, their email addresses are in this. And if you needed to reach out to people, you could. Thanks, everyone, and I'll see you next Friday or in my inbox. Bye.
Tyler McMullen: Thank you.