Bob Dylan wrote The Times They Are a-Changin’ in September and October of 1963 to give a voice to the social unrest he felt in the air. He sensed that the world was going to change, but he could not have known exactly how.
He could not have known that the next month, President Kennedy would be assassinated in Dallas. Or that the next five years would see the assassinations of Malcolm X, Bobby Kennedy, and Martin Luther King, Jr.
He could not have known that America would enter into the Vietnam War in 1965, setting off a bloody and divisive decade-long struggle.
He also could not have known about the positive changes that would take place, that President Johnson would sign the Civil Rights Act into law in 1964 or that America would put a man on the moon to close out the decade in 1969.
We are now in the very early days of a period of change that will rival the sixties. And while we cannot know specifically how things will change, we have some early signals. As of Friday, hospitals, manufacturing, hotels, restaurants, airlines, casinos, malls, the MTA, the energy industry, and Hollywood are asking for bailouts totaling over $3 trillion, and we’re just getting started. Journalists will write millions of words in the coming months about those industries. Here, our focus is on the same industries it always is, and there is already plenty of change afoot.
Location, Location, Location
Over the past three or so weeks, our sense of place has become both more constrained and more infinite.
From lockdown in our houses and apartments, we have traveled across the globe on Zoom to reconnect with family, touch base with old friends, and make new ones. On Saturday night alone, I had a virtual happy hour with college friends, recorded a podcast about one of the greatest Eagles games of all time with somebody in Philadelphia, played in a bachelor party poker tournament, and went to a Zoom party with Puja’s family. Saturday was the most packed my social calendar has ever been.
Already, as I wrote about last week, people are hacking Zoom, Slack, Sheets and other work tools to build virtual experiences that mirror IRL ones as closely as possible.
This isn’t the first time that we have tried to create virtual worlds that mirror the physical one. Back in 2003, Linden Labs launched Second Life as a virtual world in which people could chat, dance, buy property, set up stores, create new identities, and build new worlds. At the time, people thought that it could be as important as Facebook, and that we would spend real time and real money in the virtual world.
While Second Life still exists, it fell short of that promise. It turns out that we weren’t ready to spend a significant portion of our lives living as avatars in a virtual world when the real world worked just fine.
All of sudden, though, the real world isn’t working just fine, and we’re going back to lo-fi virtual worlds that offer a rough skeumorphic approximation of the real thing.
This week, I want to highlight two new sites moved us a step closer to virtual spaces that feel more like physical ones.
Elliot, who I wrote about a month ago for capturing their startup journey on camera, is back at it again, this time with a virtual mall inside of Google Sheets.
One of the things about the internet versus the real world is that it’s harder to create serendipity online than it is to create it IRL. A typical user experience would have me think about what I want, and then either search for it or go directly to the website. Elliot’s mall, while simple and hacky, recreates the serendipity of wandering around the mall online.
Meanwhile, in Russia, the St. Petersburg-based creative agency Shishki Collective is building online bars (they’re up to 14 now) that people can wander into at any time, day or night. Built using video conferencing tool Whereby, the Stay the Fuck Home Bar is more lightweight and casual than a Zoom - there is no start or end time, you don’t need a special invite, you can just show up at the bar and chat with whoever is on. Kind of like a real bar.
In a 2010 blog post, venture capitalist Chris Dixon wrote, “The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a ‘toy.’” Both the Elliot Virtual Mall and the Stay the Fuck at Home Bar feel like toys, and that’s because they are, but they are also hints that this pandemic will catalyze a further blurring of the digital and physical worlds.
Physical Real Estate Will Never Be the Same
While all of this is happening in the virtual world, physical real estate, particularly office space and retail, may never be the same.
Companies have quickly come to realize that with today’s technology, an office is a luxury, and an expensive one at that. It is often the second largest central cost, after employees, and it is one that renters are stuck paying even as they have to lay off large portions of their staff. Plus, the boss has realized over the past couple of weeks that people are actually pretty productive when they work from home. I have a hard time seeing companies jump right back into the market and take 5-or-10-year leases once this pandemic is over.
In-person connection will still be important for team-building and camaraderie, though. Companies will still need a place to gather, a home base for their teams and a place to host all-hands and important meetings, but I think they will treat offices more like flagship retail spaces. Slowly, as leases end and companies decide whether to renew or not, we will see companies take a mix of flexible workspace, more work-from-home-friendly policies, and one smaller hub that they can use to gather occasionally.
With less demand, prices for office space, which have been artificially buoyed by aggressive bidders like WeWork and Knotel, will drop precipitously. In the past week, I have talked to three knowledgable people and asked them how much they think New York City office rents will decrease coming out of this. All three said 30% or came close enough to it that it seems to be the right ballpark.
On the retail side, the drop is likely to be even more drastic. Retail was already in a state of decline, as I wrote about here, and this pandemic, which has hit the small businesses that generally lease storefronts hard, will accelerate what many believed to be the inevitable death of retail. Many small business owners are still paying rent even after they’ve shut their doors and laid off staff, and they will be incredibly wary of signing leases that lock them into such ironclad terms in the future.
Where is All This Change Leading Us?
But this is an optimistic newsletter. I think that the reset in real estate prices combined with new ways of connecting online will be a boon to experiential businesses going forward. Necessity is the mother of invention, and we are living in a high-necessity world.
Ethel’s Club, for example, has done an impressive job creating Care for Your Homies digital memberships on the fly to keep its community connected and engaged with each other and with programming from teachers, coaches, and performers of color. Before Corona, Ethel’s Club was constrained by physical space. After Corona, Ethel’s Club will have a more complete arsenal of physical and digital experiences.
With Not Boring, what I was planning to launch as a purely IRL business paying high rents for physical space will come out of this crisis as a hybrid IRL/online business. We will be able to utilize the upcoming glut of cheaper space to build amazing real-world experiences - landlords should be willing to try new concepts and enter into mutually beneficial lease agreements. And we will leverage the coming wave of digital platforms for connection, knowledge transmission, and collaboration to build a service that scales beyond the four walls and is able to reach people around the globe.
After all of this, we will be more comfortable connecting virtually, but we are also going to desperately crave in-person connection. The companies that are able to blend those two things will emerge from all this chaos stronger than before.
In a few years, we will look back on this pandemic as a turning point. The times they will a-change. We don’t know exactly how just yet, but humans are strong and resilient and creative, and we are going to come out of this with a greater sense of global connection and whole new ways of engaging with each other. I can’t wait.