En Passante
Bonnie Murray, Founder & CEO, Raccord
September 22, 2021
Only seven times in history has the S&P made 50 new highs in a single year and yet as Delta rages on and inflation rears its ugly head, we find ourselves at lucky number eight. It’s a strange dichotomy that exists today. For context, last year at this time unemployment was at 7.9% and GDP was -31.4% in Q2 2020 vs. 5.4% today and an expected global GDP expansion of 5.6% YoY, respectively. This will be the most robust post-recession recovery in 80 years despite labor shortages and significant supply chain disruptions from food to furniture. It’s no wonder, I suppose, given the Fed’s $8.3T balance sheet, or roughly ⅓ of US GDP. With the Fed put firmly in place, we are in the most favorable liquidity paradigm in modern history. However, inflated valuations across investment verticals and significant capital flows into dark corners of the market, including a flurry into structured credit, gives reason for pause. Lenders tend to accelerate the pain and their behavior is changing. Persistently low rates and prolonged government intervention have distorted market fundamentals, encouraged risk taking and reduced the effectiveness of future asset purchases on GDP growth.
The pandemic effectively created an economic pause not a real market reset. What the disruption did achieve however, was a complete shift in mindset. Workforces across advanced economies realized they could work remotely without losing productivity and recent technologies created new ways and new tools for people to be present despite being geographically dispersed. Many of the changes brought on by COVID, including digitally enabled business models and shifts in consumer behavior, will remain. The dramatic effects of how people use space when no longer being constrained to the physical infrastructure will force leaders to think strategically, meaning doing something different, NOT doing the same thing better, paving the way for new disruptive architectures that break down the boundaries between in and out of the office.
Over $4.5B in growth equity flooded the Proptech market in Q1. There were 21 financing rounds north of $50m and 13 rounds over $100m. There’s no shortage of capital chasing the next unicorn. The most prescient questions are what defines these modern companies and how will they build technologies that are sustainable, by definition, maintaining a rate of improvement. Collaboration is the tie that binds us. An organization can only enjoy enduring success if the mission behind it is rooted in a sense of purpose and staying close to our customers allows businesses to be intentional in how they deliver value. Rigid productivity has been repudiated as the new wave of technologies leverage both in person and remote work.
Someone much smarter than me once said “The complexity of problems that exist today are far more complex than the critical thinking required to solve them”. This could not be more true. We are incredibly fortunate to find ourselves in a world filled with data and technologies to assist us with these problem solving capabilities. It’s on us to seek those out.
