Momentum Podcast: 611
What Happens Next
by Alex Charfen
Let's be honest for a second. As an entrepreneur, if you could predict the future, you would. You would want to know what's going to happen, anticipate what's coming before your competition, and be prepared for what's coming your way. Right now we're in the unique position to do exactly that. In this episode of the Momentum Podcast, Alex is going to take you through the frameworks we use to cut through the noise, politics, arguments, opinions, and even conspiracy theories that only add to the confusion. If you feel like you need to know what's going to happen next so that you can anticipate and overcome the challenges of this crisis, this episode is for you.
As an entrepreneur and if you could predict the future, you would. You would want to know what's going to happen, anticipate what's coming next before your competition, and be prepared for what happens. Right now we are in the unique position to do exactly that. When the world is in crisis, by understanding what is the clear most likely scenario, as an entrepreneur or you can gain a massive advantage.
It can be hard to cut through the noise, politics, arguments, opinions, and even conspiracy theories can all add to the confusion. The good news is that viruses are normal, viruses a part of the human condition, and viruses are predictable. For entrepreneurs, this is what's most important. We need to know what's going to happen next so that we can anticipate and overcome the challenges this crisis is going to have for us.
Full Audio Transcript
Alex Charfen: This is the Momentum Podcast.
Speaker 2: Let's be honest for a second. As an entrepreneur, if you could predict the future, you would. You would want to know what's going to happen, anticipate what's coming before your competition, and be prepared for what's coming your way. Right now we're in the unique position to do exactly that. In this episode of the Momentum Podcast, Alex is going to take you through the frameworks we use to cut through the noise, politics, arguments, opinions, and even conspiracy theories that only add to the confusion. If you feel like you need to know what's going to happen next so that you can anticipate and overcome the challenges of this crisis, this episode is for you.
Alex Charfen: I'm Alex Charfen and this is the Momentum Podcast, made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers and creators of all kinds, those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny, we define it. We don't understand defeat because you only lose if you stop and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few who are willing to hallucinate there could be a better future, and instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world because entrepreneurs are the only source of consistent, positive human evolution and we always will be.
I think the most important thing for us as entrepreneurs is to determine what's going to happen next, what's going on with this crisis and what is going to happen? What are the things that we're going to have to adjust to? What are we going to have to get used to? What are we going to have to overcome in this crisis? The issue that I see in the current crisis that we have is that there are a lot of people looking in the wrong place to understand what's going to happen next. In fact, what I keep hearing from people is, what are the politicians saying? When is the President or one of our leaders going to open up the country or open the world back up? When are we going to get started again? As entrepreneurs, I want to give you some harsh reality and what is really going to happen next, what is going to happen in this crisis. And I want to tell you where this comes from.
So, as an entrepreneur, I've lived through multiple crises. Not just live through them, I've actually succeeded, I've excelled. I've grown businesses like crazy in the middle of crisis. When I was younger, just as a kid, I went through the OPEC Crisis of the 70s. I went through the real estate crisis of the 80s. Then when I was running businesses, I actually experienced firsthand 9/11, the.com boom, the first epidemic that we had over in Asia that interrupted supply chains, Black Monday, Black Friday, the Stock Market Collapse, and even the Foreclosure Crisis. In fact, just so you know where the information I'm about to share with you comes from, during the foreclosure crisis, my wife Cadey and I were the 21st fastest growing company in the country in 2011. So we started in 2007 while we were bankrupt and we became the 21st fastest growing company in the country. So not only do I do okay in a crisis, I kind of tend to excel. And here's how. Here's my secret.
The secret to getting ahead in a crisis is knowing what's going to happen next. And this is crisis planning 101. Rational thinking, data and logic, understanding what's going to happen next in a crisis. And so let's understand what's going to happen next in this crisis. Let me give you some hard truths, some realities about what's going on with the coronavirus crisis. So number one, what happens next may be influenced by but is not in any way determined by politicians. Let me explain to you why. There is nothing political about what's going on in New York, as far as the realities of this crisis. What's happening in New York is we have a lot of people crammed into one place. The virus is transmitting from one person to another person way too fast and we're seeing massive death counts in a place like New York.
So what's the reality of this crisis? Some areas are going to lose value. We are going to see a mass exodus from New York. It's coming because what we aren't talking about and what politicians are not mentioning is that viruses are predictable. Here's what we know about viruses. Once they're in the environment, they tend to stick around for a while, they're not going anywhere. And so what we are going to see in our environment is we don't know about immunity with this one. We don't know. We know that New York is a reality and now there are some cold, harsh realities getting thrown in the market right now of this virus. I hear people saying, "Let's open the country back up," but we've had two major meat producers have to close down because their staff is getting sick. And so what we are hearing from some people is, "Let's open the country back up and go for it." But we are facing the realities of this illness actually taking workforces out of production, out of productivity.
And so when we look at this, here's what we have to understand. The coronavirus has introduced us as entrepreneurs. To me, the coronavirus is an accelerant. It has accelerated all types of things that were happening, should be happening, should be moving there in a direction. So what are the realities behind this? One is it's going to be in our market for a while, and here's what it's done. It's accelerated the shift from in-person to virtual. It's accelerated the shift from brick and mortar retail to online retail, from in-person services to delivery services. It's accelerated the shift from in-person medicine to telemedicine. It's so ridiculous that for the last 10 years, doctors had wanted to practice telemedicine and be able to have appointments over the phone, but insurance companies have refused because it just wasn't possible. Now it's happening. For over 10 years, large corporations have said, "There's no way to have a virtual workforce. We have to have everybody in person." Overnight everybody went virtual. So what does this mean? What is going to happen next? Let's get very real about what's happening in this crisis. So here's some of the shifts we're going to see. We are seeing a tectonic shift in the restaurant business, in the retail business, in entertainment, in shopping. Here's what's happening. Human beings are in this crisis right now and they are resetting habits and outlooks and opinions. Te habit of going to the restaurant, the habit of going shopping, the habit of going to try on clothes, all of those are being shattered and they're not just going to snap back together when this goes away. And when we look at what is happening to businesses, businesses are crumbling right now.
So when people are talking about we're going to have this V-shaped recovery and everything's going to snap back together and we purposely closed the economy so it's easy to open back up, as entrepreneurs, we need to know something. We are entering a prolonging distressed market, and there's no way we couldn't be. Let me just make the argument for why there's absolutely no way we are not entering a prolonged distress market. Here are all the factors why. Number one, 17 million people have lost their jobs over the last three weeks. They will not all be rehired and this week, Thursday morning 8:00 a.m. Eastern standard time, we are going to find out how many people lost their job last week. We've had 3 million in change, 6 million in change, 6 million in change. I think we're going to see another number very similar and we will talk 20 million people losing their jobs in the last month in the United States.
That in and of itself has pulled billions of dollars in spending out of the economy. 31% of renters couldn't make their rent payment last month. So just in the past four weeks, we've had unemployment go from single digits, lowest it's ever been, to the highest it's been in a long time and to record breaking weekly unemployment numbers we've never seen. 31% of renters are not paying their rent, which tells us that we know that, that market is going to be decimated. The residential housing market, the commercial property market are both going to have massive challenges. So restaurants are beginning to crumble right now. So we're seeing massive issues in residential and commercial real estate. So here's why. First residential, when 31% of people don't pay their rent, a huge percentage of landlords are not going to pay their rent. That is going to start a domino effect of renters not paying, landlords not paying, property values going down, foreclosures going up, property values going down even further.
Anyone who has to sell can't sell. It's the foreclosure crisis all over again, only the foreclosure crisis was primarily residential. There is a nother huge trigger happening in the commercial market right now. So in the commercial rental market, millions of businesses have just left their offices, they have gone remote, they are working virtually. And I've talked to a few of my friends and I've asked, "How is it working remote?" And the answer I get is something like, "I'm wondering why I pay $10,000 a month for an office." What we're going to see from this period of time, what's already happened, is a massive move from office space to virtual offices, which is probably where it should have been. So we're going to see changes in the residential market, the commercial market.
Now let's talk about travel. Travel, hotels, restaurants, resorts, airlines, the entire travel industry right now is in 70, 80, 90, sometimes as close to 100% shut out. The hotel that we normally do our events with, the Sonesta Hotel, has a sign on the door that says it's closed until June 1st. 100% shut down. So when we look at the travel industry and we look at hotels and restaurants and event centers and airlines, what we're going to see is that the habits people are forming in this crisis, not traveling, not going out to do things, the corporations that are realizing, "We don't have to send 20 people to Korea to cut a business deal. We did it on Zoom and it happened anyway," we are going to see a massive reduction in travel. So let's just tick off where we're seeing reductions. Residential real estate, commercial real estate, travel. Let's throw another one on, retail.
Brick and mortar retail has been struggling for so long. Other than some standouts and really some very specific niche standouts, like take T.J. Maxx, did great, discount clothing, has been doing great for a long time. But when you look at most of retail, retail has been struggling for years. Retail has been hanging on for its dear life for years. I know, I grew up in the retail business, and as we speak right now, here's what I want you to know. There are retail business C-suites, the executive suites, right now where they are meeting with the attorneys and they are trying to figure out how to hold off bankruptcy all ready. So many retailers weren't prepared for something like this. So many retailers were barely keeping it together, barely keeping the doors open. We are going to see bankruptcies, closures, store closures, in record numbers in the coming weeks and months. It's just going to happen. There's nothing we can do about it because this is an industry that was already on its way out and now is getting assisted on the way out.
And then when it comes to brick and mortar restaurants, we are going to see a massive shift in the way people behave. Dining in is going to be a lot less desirable than carry out. And we will see, I predict, tons of restaurants close down and the shift from dining in going down to carry out going up continue. And even in something as simple as supermarkets. We've already started to see a shift in the supermarket world from having supermarkets that consumers go to, to having supermarkets where consumers hire shoppers to buy stuff for them, like an Instacart type or delivery service. They're called dark supermarkets. In a lot of cities, you actually see a supermarket with a warehouse next to it where the private shoppers shop. Here's my prediction. Coming up very soon, you're just going to have black supermarkets where nobody ever goes except for people who are shopping for other people. We are going to completely and totally shift industry after industry.
Now, when you look at all of these challenges, when you look at commercial real estate, residential real estate, brick and mortar retail, restaurants, travel, entertainment, all of them have been significantly challenged by this crisis. And so here's what we need to know as entrepreneurs. How long is this going to last? Well, we know how a virus acts. When a virus comes into a market, it usually takes a year or two or three for us to contain it, for it to die out. We are going to be in some sort of social distancing or at least an increased protection or increased fear for a long time. What does this mean for us as businesses? Let's get real. This is the biggest opportunity we've ever had. When you look at the amount of shift that's going to happen right now, the amount of changes that are going to happen right now, this is the biggest opportunity for small and medium size business ever.
Why? Because in a crisis, you can displace a market leader in a crisis, if you create a solution, it's expected that it's brand new and unproven and nobody's seen it before. And in a normal market, when you're trying to sell something new, you're suspicious. In a crisis market, when you're selling something new, you are more desirable, and getting people to take a product, getting people to accept something, if it's the right solution, people act with urgency. And in a crisis, businesses don't grow linearly, they explode, they grow exponentially. Just yesterday I was on a call with one of our clients. His name is Daniel Rosen and he's the CEO of a company called the Credit Repair Cloud. You can go to creditrepaircloud.com to check it out. Daniel shows people how to become credit repair heroes. So they start their own credit repair business. They help their friends, their family, people in their community improve their credit so they can buy the goods that they want.
So Daniel's business at the beginning of this crisis was right around a $6 million run rate. When I started working with him a couple of years ago, I was rounding $2 million run rate. He's gone from two to six in a couple of years and in the last month he's gone from six to nine. That is how fast businesses grow in crisis. And so is this going to be hard? Absolutely. Is this crisis going to be around for a while? Yes. Is it going to get fixed by politicians? Most likely not. And politicians are not going to change human behavior. So, as entrepreneurs, here's what we need to understand. We need to understand this is here for a while and it's not going anywhere. We need to understand that this is a crisis that we need to adjust to and actually accept that this is something we're going to be dealing with for a prolonged period of time.
And here's what I want you to know. The more you understand about the data and logic behind this crisis, the more you understand about the details behind this crisis, the more you as an entrepreneur can anticipate what's to do next and make the right decision. So here's what I would suggest you do. Go to clarityduringcrisis.com. This Friday, I'm going to be sharing a crisis briefing where I'm going to go through the following. I've put dozens of hours into the research behind this. As a crisis manager, as a crisis consultant, I want to share with you the same information that Fortune 500 companies right now are getting from companies like Bain and McKinsey and other huge consultants. So number one, I want to show you how to understand this crisis, know what's behind it so that you can share it with yourself, your team, your family, what is going to happen with confidence.
Two, I want you to be able to adapt to the changing market that's going to emerge from this crisis. Let me share with you the clear market indicators that show us exactly what's going to happen next so that you can adjust your business plan, you can adjust your marketing, and you can adjust so that you will succeed in this crisis. And third, this is most important, I want you to not just understand this crisis and not just adapt to this crisis, I want you to overcome the challenges that it is bringing towards us, and the challenges are major. This is going to significantly shift the next several years to a decade of your business and I want you to understand the details behind it. Now, if you love conspiracies, if you love politics, if you think that what I said is kind of crazy, I've got a suggestion for you. Come to my webinar on Friday and hear a different opinion.
Let me share with you the same type of crisis briefing that every Fortune 500 CEO is getting right now. Here's what it is. They're getting data, logic, and they're being explained the most likely scenario because when you know the most likely scenario and you can plan around it, that's how you, your family, and your business are going to succeed through this crisis. So go to clarityduringcrisis.com right now. Register for my webinar and I will see you live on Friday. And if you have questions about your business, about how to navigate this crisis, about what to do next, I've successfully navigated more than one crisis in my career, like I shared. In fact, I kind of feel like I was meant for crisis. So if you have a question, if there's anything I can do to help, I will see you Friday. Go to clarityduringcrisis.com and I'll see you there.