COVID-19 and the Arch Viz Industry (March 23, 2020 Update)

UPDATE: MARCH 30, 2020 Update Now Online

Well, where does one even begin this week’s update?  The last report was March 16, which already seems like a year ago.  Days seem to feel like weeks and weeks like years in this environment where the landscape changes on almost an hourly basis.

This week, my update is going to cover a lot of ground and I’m going to be pretty real and frank about what is coming and what we are already seeing.  

First off, thank you to everyone that has continued to send me updates about what is going on in their part of the world. I’ve spoken to many of you by phone, chat and have received many emails. I also was able to sit in on an investor meeting for a very large US real-estate company that provided some insights into what might be coming. 


Work from Home the New Normal

Since last week all studios I’ve spoken to have moved their workforces to home. The transition seems to have gone well for most, but there are unique challenges when our communications are turned on their head.  Contact with clients has slowed down, it’s challenging keeping everyone up to date internally and as with all remote communication, there can be misunderstandings. I think for the foreseeable future it’s going to be important to ensure studios maintain regular video calls with teams to both maintain their sense of community/culture and to ensure everyone stays on the same page.  For many, this is the first time they have ever worked from home, emotions are high and connection to something familiar is going to be really important. 
 

As almost all schools around the world have been closed for the foreseeable future, those with children are already reporting how challenging that can be when working and managing childcare at the same time.  It’s easy to think this is an issue only for our industry, but remember your clients are also in the same boat. If you need to take a call and you have children running around in the background, I don’t think anyone is going to hold that against you. Clearly you will want to manage this as best you can, but don’t forget this is the new normal.

As with last week, some systems are buckling under pressure. Internet connections slow, VPN is not as fast and internal networks, not used to remote working, lose connectivity. I expect the next few weeks will bring to light many new challenges that will impact productivity. 

There are also concerns about maintaining the security of both internal resources and client files. At the end of the day, this comes down to trust and an expectation that everyone understands what’s on the line.  I think most will do the right thing and I doubt this should be a large scale issue.
 

Coming from those who are used to remote working, the advice is almost universal. You need to establish routine.  Start work at the same time every day, take breaks, get dressed for work, and when the end of the days comes, you put your machine aside. Clearly things are not going to be the same as they were in an office, but trying to establish some routine will help. While tempting to follow the news and social media 24/7, it’s neither productive or healthy. Also, not everyone has extra space in their homes to set up a home office. That in itself is an added challenge when your dinner table is doing double duty as your family meal time location and your office.

Here in Alberta, Canada our psychologists association released  the following document for Psychological Coping during a Pandemic. It’s a great resource for those struggling emotionally with what is going on. 

We’re here and open for business

I think I have seen more “we’re open for business” emails coming from studios in the last week than marketing emails in all of 2019!  This is a nice way to let your clients, current and past, know you are adapting like everyone else and that you are open to help them.  I think the sheer volume of these types of emails suggests both the need to keep the line of communications open, but also that there is some fear the work is going to slow down and many are proactively reaching out to their contacts to help bridge the inevitable gap. 

Kilograph in Los Angeles posted this great video last week that shows how hard many are trying to maintain their culture.

This is where things get serious
 

Last week most had not started to feel the impacts on project holds or slowdowns. There were a few small signs, but nothing widespread.  This week, that has most definitely changed. While not everyone has seen a change yet, many have and I expect this is just the beginning.  I am hearing reports now of projects going on hold for weeks, potentially a month, project cancellations, sometimes severe, and a drop off in the volume in quotes coming through the door and delays in payments. I am also hearing a number of proposals have also been put on hold. The real-estate investor call I was able to sit in suggested that things will rebound quicker than other downturns. They indicated liquidity is there for construction but deals are slowing and close times are being delayed up to 30 days.  The overall feeling was that Q2 is going to be very rough.

In speaking to those that weathered the great recession of 2008, even if they are not yet seeing a slow in work, they fully expect it to happen and many are understandably worried.  Many know that a queue months deep full of work can literally disappear in a matter of days. I’m hearing speculations that there could be 25-50% of jobs going on hold or disappearing in the coming weeks and months.

As much as I don’t want to include this in my report, I also don’t feel like sugar coating this is going to help anyone.  In that vein of transparency, I am already hearing multiple studios looking at wage rollbacks. This is not something any employer wants to do, I can assure you, but may be a necessity to prevent staff layoffs which are not out of the question if things continue to get worse.  I don’t publish this to incite fear, although I know it will likely have that effect. I publish this simply to remind everyone that in this environment, cash is going to be very important. If you are an employee, you should be reducing your personal budgets where possible with the expectation that this could happen to you. I expect for the majority this will not happen, but these are very uncertain times. Just as most studio liquidity is going to be tested in the coming weeks and months, studio employees should also be prepared.  In Canada, the last four days of last week saw over half a million people apply for unemployment. Now clearly that includes many other sectors well outside our industry, but everyone needs to know that businesses are under extreme pressure right now.

I am hearing that the volume of existing work in the queue ranges from a few weeks to a few months.  Those with more work might be able to delay the inevitable impacts of the slowdowns, while those with less work will feel this much sooner.

Events

As someone who spends 3-4 months of every year attending events, I think it’s fair to assume most if not all events will be cancelled in 2020. Anything that was to happen in the next two months has already been cancelled or postponed.  I know there are some that have not yet made formal announcements, as they hold onto hope this clears up sooner than later. However, I don’t personally think there will be an environment where that is going to be practical for the remainder of 2020.  Obviously my hope is that is not the case, but when we see Olympic athletes around the world pleading for the IOC to postpone the Olympics, I think that should say it all. Not to mention reports all suggesting that social distancing is likely to last many months and not weeks.


Don’t do it! Dropping your rates is NOT the solution!

Last week I made a post on my personal Facebook feed about an observation that was very troubling to me.  I am going to include it here because I think it’s very important that this industry heed this warning. I was delighted to see so much support for what I wrote, but I think there are some in this industry who don’t realize the severity dropping rates will have.

Post from Jeff Mottle’s Facebook Feed (March 18, 2020)

I doubt this post will be popular, but I have an issue with the rash of companies offering their software/plugins for free or at massive discounts. Look I get it, there is some virtue in wanting to help artists in the industry, although I'd argue the optics of this sort of discounting/marketing is opportunistic. There are however a few other problems I see.
 

1) We're at a time when some companies are going to soon be hanging on by a thread. When we get through this we need your software to be there. That's not going to happen if you drop your rates to a point where you are not earning money. You need a cash reserve like everyone else.
 

2) There are a TON of new artists and studios in this industry that have never been through tough times. All this free and discounted software sends a message that this is what you do when times get tough. If you want to value add, or do modest promos, or enhance the support for your customer, that is one thing, but fire sale and free send a very poor message.
 

3) After 2008 we saw lots of companies drop their rates. Those rates for the most part never recovered again because a precedent was set and clients came to expect it. If we send the message to these new studios and artists that we should start dropping rates, giving things away for free, we WILL kill this industry. There are a lot of companies operating with rates that are already unsustainable, unhealthy and downright injurious. PLEASE stop encouraging this sort of race to the bottom behavior. This is a tough time for everyone, but firesale pricing is NOT the solution.

A sobering reality - CGarchitect needs your help

If you remember last week I posted about the importance of diversity and liquidity in these times to weather this storm. What I am about to write pains me like you can not even possibly imagine.  I have swallowed more pride in the last last week, shed more tears and lost more sleep than I wish upon anyone, but I feel it’s important for the industry to know and to emphasize just how serious all of this is.

I started CGarchitect in 2001, and while I never started the site with the intent of being a business, it quickly became one out of necessity. For the last 19 years the site has been my livelihood.  While I don’t consider myself to be a business expert, I guess if I was able to survive this long, I must have done some things right along the way. Since the start I have bootstrapped my business and have always been very conservative with how I spent money to ensure there was always plenty of runway and liquidity at my disposal.  While I am in the same industry as all of you, I am not in the same business, but all of you are my customers and I consider many of you to be my extended family.

Five years ago I started planning what the new CGarchitect would look like and for the last year my development team has been working non-stop on this new site. We are now just a few weeks away from launch. My team has worked very hard and am really proud of what we have developed, but I’m afraid this could all come to an end.  

The one time in my career when I invested significantly in the CGarchitect community, and drained my resources below what I would normally feel comfortable, COVID-19 has bitten me in the ass.  The instability of this environment has literally dried up all of our sources of revenue and I am hanging on by a thread. To say I am scared at the prospect of what is coming would be an understatement.

I am working very hard to try to secure enough funding to carry us far enough to give this new site a chance, but much of this is going to depend on how much value this industry sees in what I have done the last 19 years and how much all of you value the new site. 

The new site is no longer just a website, but a full blown engagement and exposure platform for the industry.  Last I checked we are some 25,000 lines of code. This platform will have far more functionality for free than the current site, but I will also be launching subscription based Pro plans to access some of the more advanced functionality. 

When we launch, the response from the community will dictate if we continue or if 19 years of work goes down the drain.  While our Pro Plans offer a lot of value, my hope is that everyone will see their subscription as not just access to these features, but also as an investment into the future of our industry and hopefully into the good I have tried to do for this community.  All of you are like my family and I have always considered the industry to be like my baby. I have poured my heart and soul into it so we all have a better place to work and thrive. I know many of you are or will be struggling as well, so I feel a fair bit of shame, embarrassment and loss of pride even asking any of you to help me, but there is no other option.  When we launch, your support is going to be the only thing that will keep the site afloat until things return back to normal and our sponsors and supporters return to fill the gaps.
 

In the interim, if you are a user of Chaos Group or Corona products it would mean a lot to me if you are able to purchase your upgrades and licenses through us directly.  When you purchase your licenses through us it helps support our industry and CGarchitect. https://shop.cgarchitect.com/ 

To leave everyone with a bit of positivity and hope, I wanted to include the first video from a new series by the team over at Arqui9. This was live streamed last week. If you want to just stay away from the news and focus on the art look no further than Art Jam!
 

I wish all of you good health, safety and luck in the coming months.  You guys are my family and I want to see everyone succeed. Your support means the world to me.

If you have updates, please send them to me so I can report next week.

Sincerely,
Jeff Mottle

Founder - CGarchitect