Deep Dives

Finding Opportunities In The Time Of COVID

Finding Opportunities In The Time of COVID

Thimble, a U.S. startup, offers flexible and short-term business insurance to SMEs and micro-entrepreneurs. And business couldn’t be better. “Demand has skyrocketed during the COVID pandemic,” says Thimble CEO Jay Bregman.

Employers in the U.S. have shed millions of permanent, full-time jobs and an increasing number of these laid-off workers are starting their own companies.  They need insurance but due to the uncertainty caused by the pandemic prefer not to take out the annual policies offered by traditional insurers. Thimble provides liability coverage for customers in more than 130 professions, including handymen, landscapers, cleaning people and dog walkers. Policies can be purchased directly from the Thimble website or app by the hour, day, week, month or year. Bregman says Thimble has seen an “incredible” rise in demand not only from micro-entrepreneurs and small businesses but also from bigger businesses, who, due to the pandemic, can’t forecast what’s going to happen. “They can’t buy annual policies or don’t want to buy new policies because they don’t want to be stuck overpaying or paying for something they don’t need and so they’re buying our products,” says Bregman. “We think the time has come for New Age products that allow people to buy only what they need.”

Thimble’s flexible offer is just one example of why agile startups are seeing business boom during the pandemic while insurers and some corporates in other sectors are finding themselves on the back foot.  The creative ways that startups are responding to existing or emerging needs that are being insufficiently addressed by large corporates and governments during the COVID pandemic was the topic of a December 8 roundtable organized by DataSeries, a global network of data leaders led by venture capital firm OpenOcean (an investor in Thimble), and moderated by The Innovator Editor-in-Chief Jennifer L. Schenker.

Panelist Austin McChord, Ex-CEO & Founder of Datto, a provider of cloud-based software and technology solutions delivered by managed service providers, says he sees lots of opportunity in servicing the needs of SMEs and newly minted entrepreneurs. “A lot of this pandemic stuff is not that dissimilar to when a forest fire comes through and clears out a whole lot of things in an area but then creates new open space for new plants to show up and strive to survive and grow and flourish,” says McChord. “In a huge way COVID is just making the future come faster.”

People who had considered launching their own businesses but were waiting for the right time are making the leap during the pandemic out of choice or necessity. “If you are in the business of serving these people then you had better be ready to reach out to them and onboard them,” says McChord. “There are so many new offshoots, so many new seeds being planted during this forest fire of a pandemic. I think it’s actually a really exciting time to be in this space. “

Enabling Micro-Entrepreneurs

Panelist Allan Martinson, a co-founder of Estonia-based startup Xolo, couldn’t agree more. “There are millions of people in the U.S. and Europe who are involved in independent work and the crisis is actually creating more opportunities and more growth in that sector,” says Martinson. Xolo offers a self-service-based, highly automated and location-independent management solution to more than 57,000 micro-entrepreneurs in 119 countries.  The company wasn’t sure what to expect when the pandemic started. “We were quite afraid when COVID first hit that many of our customers would end up going bankrupt or close down their businesses,” says Martinson. Xolo sent out an email to its customer base and asked them how they thought the pandemic might impact them “We got about 400 replies and about 25% of them said they were worried that the pandemic would destroy their businesses,” he says. “We braced ourselves for the worst but nothing like that happened. Freelancing has been steaming ahead and actually accelerating during the last six to nine months and, for us, that is a very welcome development.”

There are around 22 million self-employed people in Europe, according to a December report compiled by Boston Consulting Group and Malt, a French scale-up that helps corporates recruit freelancers. Salaried work peaked around the year 2000, and since then, the number of independent workers has been on the rise across Europe, according to the report. Among them, freelancers are spearheading the growth of independent work: they are the fastest-growing segment of the European labor market. France has seen a 92% increase in the number of freelancers in the past 11 years while Spain has seen a 40% increase. The exception is Germany, where the number of freelancers in Germany has remained steady at around 1.3 million.Though the digital freelancer movement was initially driven by the rise of the IT sector and software developers, it is now continuing to grow thanks to workers from a wide variety of industries.

Servicing SMEs

It is not just the number of freelancers that are experiencing explosive growth. The creation of new small businesses is also on the rise, with the U.S. reporting a higher than usual number of new business applications during the pandemic.  In fact, in the third quarter of 2020 the U.S. experienced the highest quarter of new business applications since it began recording data about them in 2004, according to a NPR story.    

These new businesses, along with existing SMEs, are in need of all kinds of IT support services. Datto works with managed service providers that serve as the outsourced chief technology officers or chief information officers for small businesses. “That model has been really successful, and we don’t see that changing, as it enables person-to-person face-to-face relationships and that is something that the large players in the industry just can’t provide,” says McChord.

Beyond IT troubleshooting, cybersecurity is among the top priorities for companies both big and small in the time of COVID, says McChord. “On the cybersecurity side the pandemic has really challenged a lot of paradigms,” he says. “And a big piece of it is that both small and large businesses regarded the secure place to work as inside the corporate network and then they built this big expensive wall around it to ensure that only good things happen there. Well, guess what? No one’s in the corporate network anymore. Workers are taking these machines home, out into the wild, and they’re all going through VPNs. And so it has caused a lot of rethinking around how a lot of that security is done, and where the security infrastructure gets deployed.”

In the new work-from-home environment time management is more important than ever, says panelist Fred Krieger, Founder and CEO at Scoro, a work management platform focused on SMEs.

“What we offer to companies, regardless of their size, is a simple promise: we automate their workflow in a way that allows them to cut five hours per week per person,” says Krieger. “It is all about being efficient and working on things in the right way.”

Work management software is “actually drastically growing, it’s kind of exploding,” says Krieger. “Culturally, a lot of companies have been completely dependent on different kinds of in-person activities. The pandemic has pushed them out of their comfort zone. They finally need to let go of measuring when and how and where people show up. Instead, they need to actually measure the outcomes.”

Krieger says he expects market consolidation both in terms of tools and the number of players in the work management space. While it can be tougher to sell horizontal solutions during a pandemic when many SMEs are pinching pennies, Krieger says he doesn’t see it as a handicap. “From a customer’s perspective these nice time management tools are kind of like patches, quick fixes to problems. But when you have a lot of patches and quick fixes that is where you get this drive to start consolidating,” he says.  “The pandemic has pushed people to adopt a lot of these quick- fixes so in the medium-term we think COVID will be a huge contributor to our success.”

Building a successful business during the pandemic has been less straight-forward for Booksy, which specializes in helping book appointments online, mainly for hair and beauty salons, across different geographies. The salons were hard hit during the pandemics, with many being forced to close their shops during lockdowns. “The crisis had a lot of unexpected consequences for us,” says panelist Marcin Borowiecki, General Manager of Booksy’s U.S. operations. Rather than focusing primarily on adding new clients, Booksy shifted its attention to helping existing clients survive by helping them introduce gift cards or manage consent forms and making sure the timing and volume of appointments adhered to social distancing requirements.

The pandemic also opened a new line of business for Booksy in an area that was completely unexpected. Banks and telecommunication companies, for example, started worrying about controlling – and limiting – the number of people visiting their branches in order to keep their employees safe and abide by government rules. “We have deals with BNP Paribas, with Credit Agricole, with one of the major telco companies and a couple of other retail players who basically are utilizing Booksy to manage appointments and manage traffic in their outlets,” says Borowiecki. “For us it adds a completely new leg of business and opened up our marketplace to different types of services that would have been impossible before COVID. “Banks’ willingness to get back to business quickly while providing a safe environment for their clients and employees opened the door for a start-up to provide an important solution for their day -to-day operations.”

Targeting Gaps In The Market

The panelists said they believe there are still plenty of untapped opportunities to serve SMEs post-COVID, including, the need for improved knowledge sharing, automation, convenience for the end user and the increasing expectations in this context, and the importance of streamlining processes and design.

Datto’s McChord sees opportunity in knowledge sharing between colleagues. Tools already exist such as business communication platform Slack, work tools startup Notion and Confluence, a web-based corporate wiki developed by Australian software company Atlassian. “But nobody has nailed it yet,” he says. “There is definitely a better way out there. If information can be shared more easily and more quickly, you could get a lot more done with less people and that would be huge,” he says.

Ease of use is another area that offers opportunity. SMEs need and expect turnkey solutions, says Booksy’s Borowiecki. The goal is to come up with solutions that are customized, automized and designed to be super easy for customers to use, he says.

Services that help SMEs become more efficient will also be in high demand, predicts Scoro’s Krieger. “There is a lot of demand for simplifying processes for companies, both big and small. “Simplifying starts with creating a proper structure and understanding what actually is moving the needle and then becoming more proactive about time management,” he says. “Companies need to decide what are their long-term goals. Being efficient doesn’t mean you need to squeeze out more from your team or from yourself. It means getting to the same result in less time.”

Thimble’s Bregman sees opportunities in helping businesses cope with uncertainty. “One of the things that we think about is non-essential businesses here in the United States, and just how difficult it has become, and how uncertain it’s become, to run a non-essential business,” he says.  “We naturally think about insurance. if their businesses shut down, as being part of the solution to that and we’re developing a product for that,” he says. “But even outside of that, we think there are probably other things, other tools, that can be used for when non-essential businesses are inevitably going to be closed again.”

As the world adjusts to the new normal, Datto’s McChord sees an opportunity to develop entirely new types of services for SMEs that adopt hybrid solutions for workers.  “What will small businesses look like six to twelve months from now, when we’re not government mandated to stay home and where people do their work becomes more of a choice?” he asks. “What does that hybrid workplace look like? Workers will still probably want to go to the office some of the time to get out of the house. But on the other hand, it’s now a proven fact that workers can be productive, working from home. We need to figure out what the tools and services needed to serve those businesses will look like,” he says.

There is no shortage of spaces requiring innovation, says McChord.  “If I was going to start a startup, I would look at what are the tools that these big enterprises have that SMEs don’t and how do we make this available to small businesses at a price point that makes sense to them and give them that same capability so that they can compete with the biggest of the big,” he says. “Entrepreneurs need to come into work thinking about ‘how do we empower these small businesses to compete and take on large enterprise?’ If they do that then then they’re going to end up building the right tools and the right products. I think what’s really exciting is there’s room for so many people to step up and empower these SMEs to grow and take on their large entrenched competitors.”

This article is being made available to both readers of The Innovator, an independent global publication about digital transformation and DataSeries, a global network of data leaders led by venture capital firm OpenOcean , under a partnership agreement.

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About the author

Jennifer L. Schenker

Jennifer L. Schenker, an award-winning journalist, has been covering the global tech industry from Europe since 1985, working full-time, at various points in her career for the Wall Street Journal Europe, Time Magazine, International Herald Tribune, Red Herring and BusinessWeek. She is currently the editor-in-chief of The Innovator, an English-language global publication about the digital transformation of business. Jennifer was voted one of the 50 most inspiring women in technology in Europe in 2015 and 2016 and was named by Forbes Magazine in 2018 as one of the 30 women leaders disrupting tech in France. She has been a World Economic Forum Tech Pioneers judge for 20 years. She lives in Paris and has dual U.S. and French citizenship.