Sep 17, 2020
New Companies Face Tough Task Overcoming Pandemic, Recession
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By JOYCE M. ROSENBERG, AP Business Writer
NEW YORK (AP) — Julie Campbell had to rethink her new wallpaper business before she could sell her first sheet.
Campbell launched Pasted Paper in February, but soon after, the coronavirus forced the cancellation of the trade shows where she expected to introduce her wallpaper to prospective retail customers.Suddenly, the $30,000 she’d invested in creating the wallpaper was at risk, dependent on her transforming the company to sell directly to consumers.
To save Pasted Paper, Campbell learned online selling and marketing — skills not immediately in her wheelhouse.
“I had so much inventory and I needed to sell it. I was forced to figure this out,” Campbell says.
A recession amid a pandemic may seem like the worst time to start a business. Despite millions of loans and grants from federal and state governments, it’s estimated that hundreds of thousands of companies have already failed since the virus outbreak began.
Yet, from people like Campbell, who’d invested too much money to turn back, to others who lost their jobs and saw starting their own company as the best path forward, thousands of Americans have opted to take the plunge. A few have even folded one business and quickly launched another better suited for the “new normal” of the pandemic.
Owners of all these fledgling companies face a tough road as they try to bring in customers and thrive. While nearly 80% of startup companies had survived their first year in 2019, according to research by the Kauffman Foundation, those businesses had the benefit of launching in a strong economy.
Prosperity is tougher in a downturn — consumers and businesses spend less and new ventures tend to have large startup costs and low revenue. U.S. gross domestic product plunged by nearly a third from April through July, and there are still more than 13 million people unemployed.
Slightly over one million companies that have employees were launched in 2018 while 925,000 closed, according to the latest available data from the Labor Department.
Despite the ongoing pandemic, interest in starting a business has picked up as parts of the U.S economy reopened. The number of applications for business tax identification numbers was down more than a third at the end of March compared to year-earlier levels; in the week ended Sept. 5, the most recent data available, they were up 93.6%. The applications don’t necessarily mean businesses were launched, but the numbers do show that despite the virus’s grip on the economy, people were considering starting companies.
Unemployed people needing a source of income likely accounted for some of those applications, says Dane Stangler, a researcher at the think tank Bipartisan Policy Center. But he also says owners who closed their businesses permanently early in the pandemic might be starting up again with a different entity.
Yavonne Sarber knew her Sugar Whisky Sis restaurant in Covington, Kentucky, wouldn’t survive a government-ordered shutdown. So, she closed it for good and four weeks later opened an entirely new restaurant on the site, one focused on takeout and delivery.
“We couldn’t sit still — we knew we had to do something,” says Sarber, who also owns four Agave & Rye restaurants in Kentucky and Ohio.
She opened Papi Jocho’s Street Dogs and Cantina on May 5, less than two months after Kentucky restaurants and bars closed for inside dining. Business has been so good there that revenue at all her restaurants overall is up 25% from its pre-pandemic level even as indoor dining capacity at the Agave & Rye branches is limited to half.
Sarber’s husband Wade wanted her to proceed more cautiously before plunging into starting Papi Jocho’s. But, she says, “you need to seize the moment — you have to choose to be a victim or you have to pivot.”
Business formations dropped sharply during the Great Recession and its aftermath, but many people, including some who lost their jobs to layoffs, did start companies. Among the well-known successes from that time are Airbnb and Warby Parker, which sells eyeglasses online.
Within weeks as the pandemic spread across the country in February and March, Amy and Cody Morgan lost their executive-level jobs, Amy’s in real estate and Cody’s in the oil and gas industry. Rather than try to find jobs, the couple, who live in Cypress, Texas, north of Houston, decided to start a pool servicing company called Pit Stop Pools.
Cody Morgan ran a similar business to help pay his college expenses 25 years ago. The Morgans anticipated that demand for services like pool cleaning and maintenance would be even greater than usual with people spending more time at home.
“It became imperative that this pool service company happen,” Amy Morgan says.
The couple applied for and received a traditional Small Business Administration loan to fund their startup costs; because they applied before the creation of the Paycheck Protection Program, they were able to get the money quickly. They used a broker to help them find customers, and now have about 90. They’ve been able to hire six workers and have outgrown the shed that housed their office and equipment.
Still, they must keep expanding. It will take 200 accounts to replace one of the salaries they made pre-pandemic but the Morgans are optimistic that despite the competition for pool services in the city, they’ll be able to grow.
Like the Morgans, many new and prospective owners have chosen industries like home improvement or in-home gym equipment whose services are currently in demand, says Sara Moreira, a strategy professor at Northwestern University’s Kellogg School of Management.
“They are betting on the idea that this demand will be sustained,” Moreira says. “Even if you have a vaccine in a few months, we will think about having a nice place at home for an office, more than in the past.”
Deniz and Yeliz Karafazli were ready to put the finishing touches on their Manhattan cafe, Madame Bonte, and expected to open it in March. But as the virus spread across New York City, the siblings couldn’t get architects, air conditioner installers and other workers to come to the restaurant.
The work was finally finished in July, allowing the cafe to open, although its business has been limited by the city’s continuing ban on indoor dining. That ban will be partially eased starting Sept. 30 as officials allow restaurants to have indoor dining at 25% of capacity.
The cafe has survived because the Karafazlis’ landlord and some of their vendors gave them a break on payments. And Deniz Karafazli is heartened by the fact the cafe’s menu lends itself to takeout, with sandwiches and coffee, and revenue has been better than he expected.
“It was the right place at the right time — once we opened,” he says.
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Algorithmia Survey Finds Companies Doubling Down on AI/ML
A majority of enterprise IT leaders said the pandemic has made them realize that AI/ML initiatives matter even more than they thought, and half said they’re planning to increase AI/ML spending going forward
SEATTLE, Sept. 24, 2020 (GLOBE NEWSWIRE) — Algorithmia, a leading provider of ML Operations & Management solutions, has completed a survey of enterprise IT leaders regarding their AI/ML initiatives. A key takeaway from the survey was that companies are planning to increase their spending on AI/ML as a result of the pandemic, and that those initiatives should have been a higher priority for their organizations all along. Algorithmia’s 2020 Enterprise AI/ML Trends survey was completed in August by 100+ IT directors and above who are involved with AI/ML and work in companies with at least $1 billion in annual sales and 5,000 or more employees.
The events of the past six-plus months have no doubt disrupted the plans of IT organizations. In fact, 42% of IT leaders responding to Algorithmia’s survey said that at least half of all their AI/ML projects were impacted from a priority, staffing or funding standpoint as a result of the pandemic. But that doesn’t mean AI/ML projects are going away, just that their focus may have shifted. For example, 54% of IT leaders said their AI/ML projects were focused on financial analysis and consumer insight prior to the pandemic. Coming out of the pandemic, the same IT leaders say these projects will be focused on cost optimization (59%) and customer experience (58%). This suggests that while IT might lock-in on cost-cutting when times are tough, over the long-term they will prioritize the adoption of new technologies that enhance and enable automation.
Regardless of focus, IT leaders surveyed by Algorithmia are in agreement that AI/ML projects will be a priority going forward. 65% of survey respondents said that AI/ML projects were at or near the top of their priority list before the pandemic, and 33% said these applications are now higher on their list since the onset of the pandemic. Further, 43% of IT leaders surveyed by Algorithmia said AI/ML matters much more than they thought as a result of the pandemic, and 23% said they realize now that AI/ML should have been their highest priority IT initiatives all along.
The survey data also showed that IT leaders are planning to spend more on AI/ML going forward, and the pandemic is increasing demand for people with AI/ML job skills. 91% of survey respondents said they were spending at least $1,000,000 annually on AI/ML prior to the pandemic, and 50% said they are planning to spend more than that going forward. Meanwhile, a lack of in-house staff with AI/ML skills was the primary challenge for IT leaders prior to the pandemic, according to 59% of respondents, and the most important AI/ML-related job skills coming out of the pandemic are going to be security (69%), data management (64%) and systems integration (62%).
“When we come through the pandemic, the companies that will emerge the strongest will be those that invested in tools, people and processes that enable them to scale delivery of AI and ML-based applications to production,” said Diego Oppenheimer, CEO of Algorithmia. “These past several months have been difficult for most companies, but we believe investments in AI/ML operations now will pay off for companies sooner than later. Despite the fact that we’re still dealing with the pandemic, CIOs should be encouraged by the results of our survey.”
The complete 2020 Enterprise AI/ML Trends survey results can be found here.
Algorithmia is a single solution for all stages of the ML Ops and management lifecycle, enabling data management, deployment, management, and operations teams to work concurrently on the same machine learning project. Algorithmia enables users to connect data sources, orchestration engines, and step functions and deploy models from major frameworks, languages, platforms, and tools. Over 120,000 engineers and data scientists have used Algorithmia’s platform to date, including the United Nations, government intelligence agencies, and Fortune 500 companies. For more information, visit www.algorithmia.com.