20 May 2020 – Wednesday – #66

Yesterday afternoon I learned the phrase Me gustaría. I’ve spent too much time since then trying to understand how that phrase differs from Yo quisiera.

What’s the difference?

Brad had the best answer so far: “If a doctor recommends a colonoscopy because you might have cancer, you might say yo lo quisiera if you want to avoid cancer, or yo me lo gustaria if you enjoy having things shoved up your derriere.”

I don’t know if Brad’s answer is correct, but it’s the best so far in terms of amusement. Having been confined here in Barcelona for weeks and weeks, it obviously doesn’t take much to amuse me.

The other thing amusing me lately is space utility. Perhaps I am going batty from learning Spanish in confinement, but the whole mask debate has me fixated on Covid-19 transmission in enclosed spaces, the likely transmission culprit.

Much to my relief, one thing the space study above seems to indicate is that elevators and lobbies are not efficient places to spread Covid-19. It would be great to have more data on this, but the Twitter thread indicates that unventilated air-conditioned spaces are Covid-19 superspreaders. This is significant not only for how we avoid Covid-19 risk, but also for business models.

Commercial real estate rent is set by supply and demand, but the revenue a tenant can generate using a space constrains demand by capping the rent. For example, if a 100 square meter restaurant can generate, say, 50,000 euros per month from diners, it has to pay much less than 50,000 euros rent. In this example, the demand for 100 square meters of restaurant space drops as rents approach something like 5,000 euros.

Until Covid-19 came along, a restaurant could squeeze diners as close as comfortable to maximize revenue, increasing the rent cap of the restaurant real estate market. In a Covid-19 world, though, restaurants have to reduce diner density not only for safety, but also for marketing—who’s going to dine at a packed restaurant no matter what the price? Restaurants may be able to raise prices to capture some of their lost revenue, but not double or triple if they reduce their seating by half or two-thirds.

As I noted a few days ago, restaurants are figuring out new business models that leverage their supply chains, kitchen, marketing, and staff to generate additional revenue. Like restaurateurs, all businesses that use space—which is pretty much all businesses—will have to re-think the way they use space.

Airlines have a clear problem with passengers sitting in an enclosed air-conditioned metal tube for up to a half day. Like restaurants, airlines used to squeeze passengers together to maximize revenue yields per flight. There are the obvious Covid-19 adjustments with middle economy seats blocked off, boarding the rear of the plane first, and PPE for crew and passengers.

Further changes probably will be needed. On planes, designers are imagining new seat configurations and cabin safety measures.

Airline seat designs for Covid-19 protection.

Before passengers even board the flight, they may have to go through health screening and decontamination. All that, of course, takes more space at airports where passengers already need more space for social distancing. How do airlines create more space in airports?

Here’s one idea. If airlines moved baggage handling offsite by, for instance, outsourcing the baggage process to companies like FedEx or Mybaggage, they could free up huge swaths of airport baggage handling space to provide space for new needs like health screening. Shipping baggage rather than taking it along for the ride is a huge shift in passenger behavior, but passengers learned to change the way they fly after 9/11. The airlines have another benefit—passengers can’t blame them for lost luggage.

Retail is a large consumer of enclosed air-conditioned space. Stores now need to provide distance between shoppers and staff to protect against the spread of Covid-19, which probably reduces their revenue. In Barcelona, I’m seeing signs like this to help manage customer load.

Hardware store sign limiting customer.

Retailers can’t limit customers and maintain their revenue. They might want to take a cue from the residential real estate market.

My friend Felipe just marketed a house in the Los Angeles area using video tours. He sold it in a month at US$30k over asking price in the middle of California’s Covid-19 restrictions. The residential real estate market has slowed, but sales are possible. I’ve heard agents say their jobs are better now because buyers only tour the final two or three candidates instead of seeing dozens of places in person. In other words, remote video reduces their effort to sell a house.

Virtual residential real estate tour.

Virtual tours and video demonstrations like those used in residential real estate can give retailers a way to interact with clients before they arrive at the store. There’s nothing like trying on a pair of pants or touching a bowl in person, but a good retail clerk can have all that ready when a customer arrives at the store at a scheduled time.

I’m going online this afternoon to buy a book and shop for some plants from two local retailers. I’ll pick up the book and have the plants delivered. It’s not as nice as going to the stores where I can talk to the proprietors, but it helps them stay in business.

Once businesses dream up innovations for the Covid-19 world, how much should they invest in changing their business models. That depends, of course, on how long Covid-19 is around.

The quick answer is Covid-19 will be around two to five years. To answer that question more fully, I’m going to update a couple things I wrote about yesterday and report a new story.

Yesterday’s big story was Moderna’s Phase 1 Covid-19 vaccine results. My friend Shane was ready to celebrate the end of Covid-19 when we chatted about it. Unfortunately, Moderna still hasn’t released its testing data. There may be legitimate reasons for that, but it also may be that the company needed to pump up its stock price to raise capital. Who knows?

The Oxford Covid-19 vaccine also has been getting a lot of hype, but there is good criticism of its animal studies. Along with the undocumented Moderna results, it seems to me that organizations are taking advantage of the demand for Covid-19 treatment to hype themselves. Call me a cynic, but until there are test data, there is not a Covid-19 vaccine to bank on. If I were planning for my company, I’d say the best case is there is a Cvoid-19 vaccine early next year that scales to worldwide application in two years.

The other follow-up is Trump’s weird disclosure that he’s been taking hydroxychloroquine for two weeks as a Covid-19 prophylactic. No one knows whether he’s taking hydroxychloroquine, but everyone knows he’s signalling to his cult that he knows better than the scientist what works for Covid-19. If I were a planning for my company, I’d say that slows down a scientific response to Covid-19 by a year.

The new piece of information I’d look at if I were planning for my company is this DoD Covid-19 planning report.

“We have a long path ahead, with the real possibility of a resurgence of COVID-19. Therefore, we must now re-focus our attention on resuming critical missions, increasing levelts of activity, and makgin necessary preparations should a significant resurgence of COVID-19 occur later this year.

Task & Purpose, “Leaked Pentagon memo warns of ‘real possibility’ of COVID-19 resurgence, vaccine not coming until summer 2021,” 19 May 2020

This report is 1-1/2 months old, so I might discount it a little for planning purposes, but I would be looking at what Covid-19 investments get my company through at least the next two years.

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