The coronavirus pandemic has disrupted people’s lives all over the globe. With no playbook for how best to navigate these difficult times, some tech leaders are taking surprising measures that would have been unheard of just three months ago.
Let’s dive into five ways tech companies are responding to this crisis and what we can take away from these actions as investors.
1. Furnishing employees’ homes
Tech staff can often work anywhere with a laptop and a WiFi connection. But to work productively from home for an extended period of time is a different story. Shopify (NYSE:SHOP), a platform for running online stores, told its employees to work from home starting in mid-March. But it went one step further. It’s reimbursing expenses up to $1,000 per person to set up a home office. Furniture, lamps, and other equipment are all fair game for expensing on the company’s dime.
This little bit of extra expense will pay off, as employees will be happier and likely more productive in their well-equipped home offices.
2. Giving partners a leg up
Etsy (NASDAQ:ETSY) has built a marketplace where artisans and creatives sold $5 billion in handcrafted goods last year. As the pandemic developed, management realized its 2.7 million sellers might need some help. It committed $5 million in advertising to help drive traffic to the website and is waiving seller advertising fees through May 1st.
It’s also providing a one-month billing grace period for sellers and resources on how to navigate the federal stimulus bill to receive benefits as a self-employed individual. With no timetable for when the economy will get going again, this may just be the beginning of management actions to ensure the lifeblood of its platform continues to thrive.
3. Taking care of those who are taking care of us
Collaborative software platform Slack Technologies (NYSE:WORK) is helping organizations on the front lines of the coronavirus battle. For “all nonprofits and other organizations carrying out critical relief efforts during this time,” it’s providing a free three-month premium subscription. This isn’t just for organizations new to the platform; existing customers can benefit too by applying for a free three-month upgrade. Free one-on-one consultation sessions are also available for those who need a little help getting going with the software.
This may not bring in new customers or revenue, but it’s great to see the collaboration platform stepping up to help support those in the battle against the virus.
4. Helping educators connect with kids
On March 6, Zoom Video Communications (NASDAQ:ZM) founder and CEO Eric Yuan made a pledge to help K-12 educators, allowing them to use its video conferencing software for free.
Little did he know that in less than 30 days it would have “over 90,000 schools across 20 countries” sign up for the free subscription. Unfortunately, this good deed didn’t go unpunished.
Combined with exponential growth during the same period, the platform ran into unexpected security flaws that were widely publicized. As it’s working to resolve these issues, Zoom Video remains committed to helping teachers provide a great learning experience for students, wherever they may be.
5. Making hard decisions
Some tech companies like iRobot Corp. (NASDAQ:IRBT), the maker of the Roomba robot vacuum, are facing unprecedented issues. CEO Colin Angle shared that the coronavirus “injected significant operational challenges” into its supply chain. Between manufacturing plant closures in China and retail outlets deprioritizing non-essential goods (like robot vacuums), the robot maker couldn’t make enough robots. As a result, its most recent quarterly earnings swung to a disappointing $20 million operating loss.
Management quickly responded, reprioritizing plans for the remainder of the year. It’s focusing on efforts to further differentiate its product line and build stronger relationships with customers. In order to fund this strategic investment, it will lay off 5% of its workforce, selectively furlough employees, and put planned new hires on hold. It’s also cutting discretionary expenses, including go-to-market efforts for its new Terra robot mower.
No one likes to lay off staff or postpone new products, but these decisions will save $30 million over the rest of the year and should position the company to bounce back once the economy picks up again.
The takeaway for investors
“Sometimes the questions are complicated and the answers are simple.” — Dr. Seuss
For investors, these times can be unnerving. It’s heartening to see tech company leadership going above and beyond to take care of stakeholders and those in need. There’s no playbook for much of what we’re going through at the moment and many situations can be complicated. As the crisis continues, you should watch what management is doing for the stocks you own. Take note of who is acting with the long term in mind. Those are the leaders who are setting up their companies to thrive in a post-coronavirus world.