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It’s day 22 since Canada’s 100th coronavirus case. The number of cases is now 9,550 as of publication time. On their respective 22nd day, the U.K. had 11,658 cases, the U.S. had 54,856 and Italy 24,747.* The following day, the U.K. jumped to 14,543 cases, the U.S. 68,211 and Italy 27,980.
Startups shut out?: Businesses will be eligible for the federal government’s new wage subsidy if they have lost 30 per cent of their monthly gross revenue year over year, Finance Minister Bill Morneau said Wednesday. The government will pay back up to 75 per cent of the first $58,700 of workers’ salaries. “The Canada Emergency Wage Subsidy [CEWS] will make sure that families have a decent income and that businesses stay strong and ready to get back to work when we arise from this crisis,” said Morneau. Firms will need to re-apply every month to the Canada Revenue Agency, which will pay them back, starting in three to six weeks.
But startup executives expressed concern about how the government is determining which companies qualify. “It’s about the timing,” said Adrian Schauer, CEO of virtual-care company AlayaCare. Customers who are in financial distress may not immediately cancel their subscriptions for software-as-a-service products, but instead skip invoice payments, Schauer said. “We won’t cut them off right away, so until all of the March invoices are settled … which may not happen for at least 90 days, we won’t know if our true revenue has dropped 30 per cent or not.”
Mike Cheng, CEO of Lumen5, a B.C-based video-creation company, also said the eligibility requirements will exclude high-growth technology startups “where it’s not uncommon to see a doubling or tripling of revenue each year” due to venture capital or debt. “Much of startup hiring is done as an investment toward a future growth curve, and when that curve flattens, mass layoffs become inevitable,” Cheng said.
Asked whether new startups and other companies for which year-over-year revenue comparisons don’t capture the pandemic’s impact will qualify, Morneau said “most businesses” will be covered by the eligibility criteria announced Wednesday. “Businesses just started off in the last year, we’re working on how to deal with that,” he said, adding that details on “other situations” will be provided “in the coming days.” Ottawa will consider other options such as month-over-month revenue changes instead of annual ones, or a different comparison proposed by the company, a senior Finance Canada official subsequently told a technical briefing for reporters in response to questions from The Logic. But that’s only for firms that have been in operation for less than 12 months—Ottawa hasn’t announced any eligibility exceptions for fast-growing firms.
As this newsletter was published, Innovation Minister Navdeep Bains was on a conference call hosted by the Council of Canadian Innovators. He acknowledged that some startups “necessarily don’t fit into the revenue model” for the program, and said he’d raised the issue with Morneau. “We’re going to do our best to see what we can to address this concern, as well,” Bains said.
On Wednesday the government also clarified that the 75 per cent CEWS first announced Friday isn’t replacing the 10 per cent wage measure announced two weeks ago. The latter will continue to be available to Canadian-controlled, private companies, and they won’t need to demonstrate a loss of business. But firms won’t be able to double-dip—those that hold back the 10 per cent from their remittances of employee income tax to the Canada Revenue Agency will have that amount cut from their CEWS payment. Unlike the earlier program, the CEWS will be open to firms that are still paying salaries to Canadian employees, regardless of size and whether they’re Canadian-controlled. Executives at technology companies that employ large teams in Canada but are incorporated in the U.S. told The Logic earlier this week they were worried about being shut out.
The CEWS will cost Ottawa an estimated $71 billion, and should reduce the cost of the direct-to-households payment unveiled last week, according to Morneau.
Prime Minister Justin Trudeau said Wednesday morning he will seek opposition parties’ cooperation to recall Parliament to approve the government’s latest round of measures.
In the markets: Global markets sputtered on Wednesday. The S&P 500 and the Dow Jones were down 4.41 per cent and 4.44 per cent, respectively, at close, while the Nasdaq dipped 4.41 per cent and the S&P/TSX lost 3.67 per cent. European and Asian markets saw similar drops. The sell-off follows new insights into the potential economic impact of COVID-19, with economists predicting a downturn running into next year and U.S. President Donald Trump anticipating a “very, very painful two weeks” as the country now struggles to keep potential deaths from the virus under 240,000 people. U.S. pensions are now considering pumping US$400 billion into stocks over the next two quarters to boost equity markets. Meanwhile, analysts believe Canada’s economy is among those particularly vulnerable due to their reliance on trade. BMO’s CEO, however, believes Canada has taken “profound” actions to mitigate the economic fallout and expects to see “some positive growth in the North American economies by the end of the year.” And while credit markets are starting to see signs that the Bank of Canada’s efforts to ease strains on short-term borrowing are starting to work, the central bank is adding measures to stave off a recession: on Wednesday, it began quantitative easing for the first time, purchasing $1 billion in government bonds, a strategy to keep money cheap for borrowers. Despite calls for the bank to extend governor Stephen Poloz’s tenure to help weather the crisis, Finance Minister Morneau confirmed Poloz will step down in June, as planned.
“Many people describe it as a bit like eating a packet of chips. You take one, you take another, you take another and you can surf your way through the universe that way”: Astronomers are taking advantage of self-isolation by asking everyone to help classify the shapes of new galaxies through a project called Galaxy Zoo.
Cross-country checkup: As tenants worry about their ability to pay rent today, some commercial and residential landlords are offering deferrals, while others have created loan-repayment plans that could end up costing tenants more in the long run. Others still are balking at requests for rent breaks. Quebec is expanding its travel bans between regions to curb the spread of the coronavirus. Police will be at checkpoints to enforce the rules. Traffic at Canada’s border is down 94 per cent compared to the same time last year, John Ossowski, president of the Canada Border Services Agency, said at the first-ever virtual House of Commons committee meeting. Airlines and the tourism sector are still waiting for specific aid packages as the federal government weighs the impact that its relief package for laid-off workers will have on the economy. Schools reopened in B.C. this week for children whose parents were deemed essential workers; in the North Vancouver school district, just six out of 16,000 students attended. Alberta’s legislature is meeting in person over the next two days to debate bills to enforce penalties for breaching public health rules like social distancing, as well as protections for tenants and rules for reclaiming orphan wells in the province.
- Canada’s oil sector is poised for “inevitable” production cuts, according to Goldman Sachs, as prices and demand continue to drop.
- Canadian researchers are working on apps that would track the spread of COVID-19 through user-location data; they say they’ve been in touch with federal and provincial governments about using the technologies.
- B.C.’s Digital Technology Supercluster and the Business Council of British Columbia have partnered with the provincial government to create the COVID-19 Supply Hub, an online platform to coordinate, source and expedite medical supplies and personal protective equipment.
- Silicon Valley Bank is letting its clients, including Canadian borrowers, defer payments for six months on loans of US$10 million or less.
- After lifting data caps for some users, internet providers Bell and TekkSavvy are now hiking their monthly rates as usage surges; Bell announced the increase late last year.
- Velocity, the University of Waterloo’s incubator, is taking in more new companies, but prioritizing those working on solutions to COVID-19, all while offering its programming virtually.
- Montreal-based Startupfest has launched Pitch From Home, where startups will present their companies to potential investors, after the in-person event was cancelled.
- Toronto-based jewelry company Mejuri is laying off workers as it deals with the fallout of COVID-19.
- Corus Entertainment is delaying until June its decision on whether to pay out its next quarterly dividends, as the pandemic weighs on its finances.
- Bruce Power, Canada’s only private nuclear generator, is donating 600,000 pieces of personal protective equipment to the Ontario government.
- Montreal-based meal-delivery company GoodFood hired 450 new workers in its operations, logistics and customer-service departments last week as it tries to meet surging demand.
- Stanfield’s, the famed Truro, N.S.-based undergarment maker, could bring back over 75 of the 200-plus staff it let go earlier in March, as it pivots from making long johns and underwear to personal protective equipment for health-care workers.
Crowdsourcing the crisis: A crowdsourced list of tech talent available for hire has reached over 2,000 entries. Co-organizer Marianne Bulger told The Logic the traffic on the original Google Sheet was “so high, it actually broke.” The organizers have since partnered with Toronto-based You X Ventures to keep the list growing, and are creating a report on first-quarter trends they’ve seen, including “a massive decline in job postings on [startup job board] Prospect.” First 30 is hosting a virtual “Get Back to Work” service next week, a program designed to help laid-off people build resumes, find interview and networking opportunities and other outplacement webinars. The first 10,000 people get free access. Melissa Kargiannakis, Founder & CEO of skritswap, has created a tactical guide to running teams remotely.
Postcard from Oslo: Every day at 6:30 p.m. (12:30 p.m. ET), Jennifer Lee Koss sneaks away from her four kids, between two and nine years old, to her mother-in-law’s apartment (“just a stone’s throw away”) to chat with a small-business owner on Instagram Live. It’s a daily exercise the co-founder of Brika, a retail-innovation consultancy, a calls “a virtual pop-up”—a attempt at supporting small artisan business owners to showcase and promote their products at a time when they can’t physically sell their products at one of Brika’s pop-up stores across Toronto. “We work with thousands of businesses, and a lot are really struggling right now,” Koss said. “We were sad not to be able to offer these brands something.” Brika has been more lucky than most, she said: the lease for its Queen West storefront ended today, after five years. She couldn’t fly back to have “one last hurrah,” nor do COVID-19 restrictions allow them to move out.
The initiative started on the company’s Instagram page on Friday—the first time Koss had ever used Instagram Live. “We had so many technical difficulties that day,” she said, adding that most of the people she’s spoken to hadn’t done it before, either. She speaks to owners on FaceTime before it’s time to go live to walk them through it. From Oslo, Koss has spoken to business owners in Toronto, San Francisco and Hawaii. “I’m in Norway; everyone is everywhere else,” she said. “I just have to adjust to the time zones.” She calls it “a modern-day home shopping channel” that she’s running while also homeschooling her kids in things she wants them to learn: photosynthesis, coffee supply chains, vocabulary. Her featured guests have revealed “something crazy about themselves” in every conversation: one was on [a Taiwanese music competition]; another was a culinary chef. A jewelry owner featured on Monday launched her spring collection during the live conversation, and reported back hundreds of hits on her website afterwards. “It’s all messy right now,” Koss said. “But eventually, it might be the norm.”
- Trump is planning to meet with oil executives on Friday to discuss aid for the industry; solutions could include tariffs on oil from Saudi Arabia, The Wall Street Journal reported.
- New York City’s human rights watchdog is investigating Amazon over allegations it fired a Staten Island warehouse employee for helping organize a walkout over the company’s response to COVID-19. Meanwhile, Amazon workers at a warehouse near Detroit are planning to walk off the job for similar reasons.
- Australian retailers are rationing alcohol to prevent hoarders from depleting their stock.
- The Panama Canal Authority, which oversees the crucial trade route, is operating with 40 per cent of its staff, as the number of confirmed COVID-19 cases in the country rises.
- Snapchat has partnered with the World Health Organization on a new set of lenses that use augmented reality to encourage users to maintain social distancing.
- Uber Eats is working with French grocery-store chain Carrefour to deliver food to Parisians in self-isolation; it has similar plans for Spain and Brazil.
- Amazon and Walmart have suspended marketing deals with digital media companies including BuzzFeed, amid a broad pullback of ad spending since the pandemic hit.
- Amazon is investigating claims of “subhuman” conditions at a call centre in the Philippines, where workers are allegedly sleeping in close quarters due to coronavirus travel restrictions.
- As movie advertising slows, marketers are tweeting out Zoom backdrops people can use on their video calls.
- Streaming startup DAZN is refusing to pay sports leagues for games cancelled due to COVID-19.
- WeWork is offering some tenants half off their rent if they sign longer-term agreements.
- Global corporate tech spending could drop by 4.1 per cent in 2020 due to the coronavirus, according to a survey from U.S.-based Enterprise Technology Research.
Around the world: The European Commission is considering a short-term work payment program to help people keep their jobs across the continent. The European Union has until April 9 to release a bailout package for members. Germany has pledged €2 billion for startups. Some 130 researches from eight European countries are creating contact-tracing applications. Data-analytics firm Palantir is also in discussion with several European countries about how its software can help in their antiviral measures. Moscow has developed a tracking app for those with the virus that would allow officials to track them; it’s also rolling out a QR code system. Meanwhile, countries in Asia are closing their borders and enforcing stricter rules again over fears of importing the virus. Concerns abound that China did not reveal the full extent of its outbreak. Big Tobacco companies are testing a plant-based vaccine for the virus. Stanford researchers are speeding up the integration of artificial intelligence into clinical operations. Medicines needed to place patients on ventilators are in short supply. The virus has killed more men than women. India is converting 20,000 railway carriages into makeshift hospital wards—each will have 16 beds; it’s also doing the same for its sports stadiums. Ukraine President Volodymyr Zelensky compared the coronavirus to the Chernobyl nuclear disaster in a televised address today: “No one was afraid at the time, because the radiation was invisible,” Zelensky said. “The coronavirus is also invisible.” And for the first time since World War II, Wimbledon has been cancelled. Eight-time Wimbledon champion Roger Federer’s one-word reaction: “Devastated.”
Supply-chain bottleneck: With recycling programs on pause, Canada’s brewers are running out of beer bottles.
* Numbers aren’t adjusted for population because the virus spreads at roughly the same pace regardless of country size. Numbers may also vary based on countries’ individual testing capacity and reporting.
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