Tuesday, March 24, 2020

A leave of presence has been granted to most of the office workers, including the entirety of the private equity industry. The virtues of working from home, video conferences, conference calls, emails, texting and overnight delivery are being pressure tested. The shock of newly hirsute faces or colorful pajama bottoms on a Zoom call is hard to hide. What once was the morning chitchat in the office coffee room about weekend sports results, winners of the Oscars etc., has been replaced by an online discussion of this biblical-like virus that has crossed the globe. Equal amounts of time is devoted to the anxiety over the virus as is devoted to the clumsy fashion in which the crisis is being handled. Between the disingenuous optimism, the larding of legislation to help citizens with “secret company” provisions, CO2 reporting for airlines etc. and the inflexible bureaucracy of our national healthcare administrative agencies one is not left with a “we are in good hands” feeling. Hong Kong, Taiwan and Singapore have each been case studies in methods to quickly control the virus. Admittedly, they had the very terrifying experience of SARS to alert them to the need for better preparation. They also have the benefits of centralized authority that can quickly enact measures to remove bureaucratic obstructions and of tightly defined geography. The U.S. experience with Ebola consisted largely of writing a check and did not establish a crisis system. Our sprawling bureaucracies at the FDA, the CDC and the NIH perhaps, understandably, did not ring the alarm early, but once regional doctors and researchers in the Northwest reported strange flu findings, the response was to shut down the researchers for not following federal guidelines. Private labs were barred from creating their own COVID-19 tests. These unchallengeable agencies, where employment is not at risk for poor performance, ensure a slow response even in the presence of national emergency. During WWII, Churchill hired Lord Beaverbrook to shakeup the British Defense Industry to provide more planes. FDR hired Harry Hopkins to outrun the bureaucracy. He first pushed through New Deal programs and later implemented Lend-Lease far faster and broader than the system contemplated. At times like these, a mechanism to jolt the federal machine needs to exist.

Ghosn of Christmas past was the most unusual story in recent business activity. Carlos Ghosn, former CEO of Nissan, escaped from Japan shortly after Christmas. He was wheeled through the airport hidden in a large case for musical instruments. The plane, of course, made an instrument landing in honor of its passenger. This James Bond / Ross Perot like episode riveted the world. We have no opinion on the merits of the case, but understand his frustration at the time it was taking to even get to a courtroom. In the few portfolio company litigations where we have had to become involved, the time frames between actual court room sessions and the systems’ willingness to let either litigant delay are staggering as two year cases are the minimum and four year cases are very common.

The heroes of this crisis are the staff members of the medical facilities who continue to work despite the dangers and the people keeping grocery stores, gas stations and critical factories running. To all of them we owe thanks and more.

Be safe, considerate and careful.

I’m Rob Morris and I approved this blog.

A Leave of Presence