HLB Cross-Border Business Talks Podcast Series
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Eps 25: The integration of accounting and cyber forensics
In follow-up to our cybersecurity report 2021 we discuss the integration of accounting and cyber forensics, and ask – what should business leaders be aware of? With guests Tom Reck and Matt Ferrante, both Partners at HLB USA.Hide
Helen Smith, HLB’s Marketing and PR Manager
Tom Reck, partner at Withum, HLB USA
Matt Ferrante, partner at Withum, HLB USA
Helen Smith: [00:00:00] Welcome to HLB cross-border business talks, HLB ‘s global podcast series on international business topics.
Hello everyone. And in our podcast today, we’ll be discussing the integration of accounting and cyber forensics. My guests are both partners at Withum, HLB USA Tom Reck specializes in forensic and valuation services. And Matt Ferrante is an expert in cyber and information security services. So welcome to you both. Thank you for joining me.
So firstly, can each of you explain how you define forensics in each of your fields, please, Tom, perhaps you can start. Sure, thanks for having me. Yeah. So typically, or generally I should say forensics is the use of our accounting skills to investigate fraud, an asset misappropriation, [00:01:00] some sort of embezzlement things of that nature that basically require us to dissect and analyse the financial information.
Tom Reck: And that for use in a legal matter typically. So, it’s either something that’s already in a lawsuit or is going to be heading for a lawsuit at some point in time.
Helen Smith: Thanks. Thank you for that. And Matt?
Matt Ferrante: Yes. Thank you. Cyber forensics is applied science and technology for use in criminal civil regulatory and fact planning regulatory matters.
It provides a repeatable process and often follows a designed set of process and procedures that are accepted in the scientific community.
Helen Smith: So, Tom, as a forensic accountant what, what would be the kinds of engagements that you would generally get involved in? And what kind of records would you review?
Tom Reck: So typically, we get involved in any number of matters. So, it could be something ranging [00:02:00] from someone inappropriately using company funds for their own personal use, rather than properly for the benefit of the company or you know, we get involved in matters where corporate clients may have been diverted to another entity.
In other words, the clients themselves were stolen if you will. And you know, that negatively impacted the company, which we would be looking at. I’ve been involved in matters where there were payments being made to vendors who were in turn kicking, a portion of the monies that were being paid to them back to an individual at the company that was making the payment.
So those are the sorts of things that we would typically get involved in. And in terms of the record what I like to do is I like to start either with the financial statements or tax returns. To get a sense as to what the trends in the business have been and whether there [00:03:00] is anything that looks unusual.
So was there an increase in a particular expense category and in a certain year, did receivables go up at a time when overall revenue was declining, certain things that might give one pause. So that would be something we would look at. And then from there we would try to peel back the onion, I guess you’d say so we’d look to obtain the general ledger, which would allow us to see in greater detail the underlying transactions that have occurred. Sometimes we are able to access the systems directly. So, we can’t manipulate or change data in any way, but we can see what transpired and depending on the system that’s being used, we can see who approved transactions, et cetera, things of that nature.
And frankly, I mean, oftentimes we’re involved in matters where there’s a suspicion as to what has transpired. So with that in mind, we tried and focus on [00:04:00] proving, you know, whether our theory as to what’s what we believe has happened has in fact happened. So we might focus on a specific batch of things, whether it’s payments to an individual, whether it’s certain banking transactions or credit transactions in a particular month, or to a particular person, things of that nature.
So it, it really, you know, you start at a high level and then as I said, you peel back the onion, you work backwards from.
Helen Smith: Thanks. And so, so your ability to function on, on, on what you’re looking at as a forensic accountant is dependent on the integrity of the underlying books and records. And is that always the case?
Tom Reck: No, not at all. I mean, you know, I’d say most of our cases, you know, we do get the underlying records oftentimes after a, after a protracted fight, but we, but we will get it. But we have been involved in situations where and I can think of one specifically where [00:05:00] we were to be provided. And this was by a court order. We were to be provided with a mirror image of, of data underlying records. So if you went to think and simplistically think in terms of like QuickBooks, right? Although sometimes the system might be specific to a particular industry, but you know, we were ordered to be provided with a mirror image of the underlying records and. We were able to discern that that was not what happened, which is when we turned to the cyber team, which is, which has Matt Ferrante’s group.
Helen Smith: So, so Matt, can you tell us a bit more about what your role in all of this would be there? And then what state do you usually called in?
Matt Ferrante: It depends in terms of what stage we’re particularly brought in. As I mentioned before, cyber forensics gills with five finding matters, but often we’re brought in when there’s active litigation that is going on. Pretty much every issue that report on, on there’s a, a cyber role to that. And as most people are aware having data, just for example, in a QuickBooks file, that’s usually one piece of [00:06:00] the digital data because there’s a lot of other data that surrounds. You may have invoices. You’re going to have communications. You may have a chatlogs, SMS messages or text messages. Data is dispersed, especially with the work from home environment cloud environments. We’re brought in to help one, build the strategy, then work on identifying, collecting, preserving, processing, and setting up view for different stakeholders. So they can get a clear picture of what is going on. The good news is that with the amount of data that’s being produced, to get a very accurate picture of what has transpired. But QuickBooks will tell you, for example, I’m, I’m using QuickBooks as an example. It will tell you part of the picture. Usually not all of it.
Helen Smith: Thanks. And how technology changed and all of those and how does it affect what you’re working on?
Matt Ferrante: Technology has changed [00:07:00] significantly because as I mentioned, you have A lot of distributed systems. We deal with data that’s in motion, meaning active data that is going down with active communications emails, one form of communication. But we’ve seen stuff that we’re a lot of the financial data or communication is active. It’s being going on to the instant messaging within, within the company or some of it’s in a cloud environment. So, it’s changed significantly. There’s a lot of often cross border issues. For example, we get a court order to collect a company data. Where does that company data actually exists? Does it exist within Europe? Does it exist within the United States? So you have to make sure, as cyber forensic experts that you’re not overstepping your bounds on where you’re collecting the information. So, making sure that different court orders are drafted appropriately involves a cyber forensics team to assist with counsel, to assist with the forensic accountants to ensure that stuff is being drafted correctly. We’re not [00:08:00] overstepping our bounds and we’re getting an accurate picture. So our clients can make well informed decisions.
Helen Smith: Great. Thank you. And what should businesses and people be aware of, of generally? What controls should they have in place?
Matt Ferrante: Sure. Interestingly you asked that because what we notice is when we were talking about the integrity of the integrity of systems from a cyber forensic or cyber security perspective, we look at it as protecting the bits and bytes. So, a financial system we can help protect that from the cyber security perspective to make sure that there’s no manipulation there’s appropriate, what it trails that are in place. But we also need the forensic accountants and the auditors to ensure that what is being put into those books is going to be accurate. And the integrity of those books are accurate as well. So, the collaboration between the different groups is imperative. A good example where there’s usually underlining [00:09:00] issues. taking it into a cyber security perspective is a business email compromise or BEC fraud. The FBI reports within the US to cost businesses $1.8 billion on an annual basis. And what we find out when we go into these is that it’s not just that there’s a lack of cybersecurity controls. There’s a lack of financial controls and accounting controls that are put into place. So working with Thomas Reck’s team and other auditors is critical to make sure that those financial controls are in place. So, when people do not send wires in appropriately or that people aren’t manipulating the books. So, the integration of the two, the cybersecurity, as well as the cyber the accounting teams and the auditors is important to have good integrity of the books and to reduce impacts on an organisation.
Tom Reck: Yeah. And if I could add to that, I mean, when you look at the underlying, underlying operations of a [00:10:00] company, there’s really a lot that goes on. So, you’ve got the sales, you know, at the top, if you will, you’ve got the whole sales transaction. How do sales get recorded? Who is keeping track of any accounts receivable? Who’s able to write off any accounts receivable that may not be collected to the extent that payment is received, what controls are in place to make sure that, money that should be being received by a company is properly received and being properly recorded. You have all sorts of fixed assets on the books and books of, of companies that need to be maintained. You’ve got accounts payable, you’ve got a payroll department and an, each of these different parts of a, of a, of an overall entity, there needs to be controls in place so that the data can’t be manipulated or to try and at least mitigate the chances of the manipulation of that [00:11:00] data, allowing someone to improperly have access to a company funds that they shouldn’t shouldn’t have access to.
Matt Ferrante: Just one of the things that further elaborate on that, the controls one of the things that we get asked are, are they different from a SMB or SME, small to medium enterprise, to a global enterprise class environment? Case in point we’ve seen impacts on a on a large global financial institution, one of which I was in, and after the fact, after two out of the big fours blessed off on the acquisition of a Russian bank, I went in to a Moscow and I was just there to kick the tires to see what was going on because some antennas were raised back in, in England. And it turned out that by we recovered and identified a, a shadow network or an additional network where they’re running a kind of parallel [00:12:00] financials or a, another network where they were basically running parallel books, long story short, it was a, a billion-dollar acquisition, and it was over a half a billion dollar loss. So, we’ve seen this happen for large enterprises, as well as smaller to medium sized businesses. You need the same fundamental type of controls in place. And a lot of these, if you’re proactive, you can mitigate a lot of the impacts to a business.
Helen: Thank you for that. I was, I was just going to ask actually, whether, if you’re working for small business or of a global company as a problem is the same, is it, is it, is it, is it different?
Matt Ferrante: Obviously a larger, larger the organisation. They can usually absorb you know, much bigger, critical impacts. You see, the impacts on the smaller to medium sized enterprise be very costly. And sometimes they can’t recover on some of the the major impacts that they’ve had. So fundamentally from what I’ve seen for a cyber security perspective, I’m not speaking you know, [00:13:00] financial controls, they’re very similar and they’re scalable to the organisation they’re affordable and they’re scalable. But what we see is that where companies are proactive on putting these controls and having an appropriate audit done, that includes a cyber side to it, has been very, very beneficial to mitigate these issues and, or uncovering issues that that ever occurred. I was bought in, but you mentioned before when am I bought in, I can give you an example of when I’ve been bought in just on a cyber security audit, had nothing to do with financial controls. Where we’re analysing data that was coming in and out of the networking environment for a large construction company within the data that we’re analysing, we noticed that they were running QuickBooks and it was odd because their accounting system was not based on QuickBooks. And I said, that’s strange. Are you running QuickBooks within your environment? The CEO said, no, we’re not. We shouldn’t be running that at all. I was able to trace that data back to the CFO’s desk [00:14:00] and we identified that he was running his own quote elicit accounting, operations, and billing the company fraudulently for internet services and other stuff that the company didn’t need. And it was basically based on a shell company. Then obviously the forensic accountants came in and cleaned up the rest of the environment and the financing perspective.
Tom Reck: Yeah, my perspective to, to the, to answer that question, Helen, when you have smaller companies oftentimes it’s, it’s difficult for them to have the proper controls in place, the proper segregations of duty of duty that being said I think you can also have larger companies where things can go awry and oftentimes that, as a result of the tone from the top. Right? So, if you have someone that’s really, you know, all about just increasing the top line and doesn’t care, whether there, whether things are being done properly, for lack of a better [00:15:00] way of putting it, then anything can happen. Whereas if you have someone who maybe is very interested in, obviously in increasing the top line, but also wants to make sure that things are being done properly, then the chances of there being an issue is, is mitigated to a certain degree.
Helen Smith: Okay, thanks. Thank you very much for, for your time today Matt and Tom, that was all very interesting. Thank you.
Thanks for listening for more information about this topic and other cross border business insights. Visit www.hlb.global/insights
Eps 24: Emerging growth companies and M&A activity during the pandemic
For many emerging growth companies, the pandemic has presented unique opportunities. We sit down with Chris DeMayo, HLB’s Global Emerging Technology Leader, Patrizio Prospero from HLB Malta and HLB USA’s David Sacarelos to discuss how these companies have navigated M&A activity during 2020 and the expectations for 2021.Hide
Andrea Moseley, HLB’s Marketing and PR Manager
Chris DeMayo, HLB’s Global Emerging Technology Leader
Patrizio Prospero, HLB Malta
David Sacarelos, HLB USA
[00:00:00] Welcome to HLB Cross-border Business Talks, HLB’s global podcast series on international business topics.
Andrea Moseley: Hello everyone. Welcome to the podcast I’m joined today by Chris DeMayo HLB’s global emerging technology leader, Patricio Prospero from HLB Malta and David Sacarelos from HLB USA. We’re going to be discussing emerging growth companies and M&A activity during the pandemic. In terms of MNA activity. What are you seeing in the marketplace? Chris, I’ll start with you.
Chris DeMayo: I think when we look at 2020, we’ve seen a pretty significant increase in M&A but it’s been for a lot of different reasons. There’s been acquisitions happening because companies are sort of looking at the pandemic and it was, it was a painful, you know, event for them.
And they were sort of waving the white flag and saying, we don’t [00:01:00] have the gumption to go another two, three years and rebuild from this pandemic. We’d rather just merge up and that was combined with big companies with big balance sheets, like the Facebooks of the world who had capital to deploy and wanted to acquire good technology and good client, a good employee basis.
So, you saw a lot of deals happening there. But then you also saw a lot of companies that had been really positively impacted by the pandemic based on where they were in the marketplace, online retailers, especially on wrong retailers of food and going out to the market and raising money and high valuations off of really aggressive revenue growth became another area where companies were benefiting from the pandemic in terms of M&A.
Andrea Moseley: Patricio, what are your thoughts?
Patricio Prospero: I think that as [00:02:00] every disruptive event brings even COVID has provided with a certain level of opportunities. So, I think for what concerns M&A what we have seen is that there were a lot of companies, especially in the new emerging technology that they had found the opportunity of acquiring companies, which they didn’t manage to sustain their business through the pandemic. Having said that, I think that there were also companies which they have held to their original. We have seen a number of merger and acquisitions. They were delayed and they eventually will be closing in 2021.
We know that there are also a lot of companies, which they have requested a reassessment of the venue education of the value of the merger [00:03:00] because of the pandemic. So, I don’t think that it affected everybody in the same way. I think that there is a way that there are companies, which they have actually benefited from the situation and from good opportunities.
But some other companies, they had to hold their horses and this fell through as well. So, I think that 2020 was a bit of a year where companies, they also had to put everything on stand by to eventually see how this situation is going to get after the COVID situation.
So, I’m quite curious to see what’s going to happen in 2021, because from the analysis that we have, through surveys and through the study, we’ll see that we are seeing that eventually some merger and acquisition are going to be closed by the end of [00:04:00] 2021.
So, 2021 could be also a good year for this kind of deals to be actually achieved and close. Finally, what it was held in 2020 it could be finalised in 2021 so we will see what’s going to happen this year.
Andrea Moseley: David, how, how have you seen the market?
David Sacarelos: Well, I think after the lockdown has happened in the last year and going into 2021, maybe my comments really about 2021, I think there’s a renewed optimism. I think there is you know, quite a bit of government response. We get vaccines going out and I think there’s a view that there’s quite a bit of funding available and demand available.
The 2021 is going to be really a good year. Most people were talking with believe that 2021 will have valuations about the same or found higher than, than the in the past. And the [00:05:00] deals will be if anything, the same if not more. So, I think, yeah, obviously we had a big influx toward the end of 2020.
Most people are, are really looking toward 2021 to be a good year. I think, especially in technology, healthcare, consumer goods. Clearly retail and real estate probably are at the downside of that, of that trend. But I think overall, I think it’s going to be an optimistic year for 2021.
Andrea Moseley: We’re now, obviously in the era of remote working. Is real estate changing in this new time. And what are the role of emerging growth companies? David, I’ll start with you.
David Sacarelos: Well, I think I think that the real estate and it kind of in a handful of different ways and it does impact how you think about emerging growth companies and, and their involvement in there. I think a real estate’s going to have [00:06:00] to assess and continue to figure out their needs
and worked from home models and really whether or not, or how the market has changed from a supply and demand area clearly emerging work, emerging companies found new ways to attract capital, attract both financial capital and human capital and technology and other aspects of, of, of development and innovation. Globally because of the pandemic and you don’t have to be in a building but that assessment’s going have to continue. What we’re seeing and hearing also is that young people are frankly, a little tired of not going into the office and being with other people they believe it does, in some cases, hamper innovation.
And they want to be able to do both. They want to be at home, and they want to go in. So, I think right now, you know, the market’s going to have to assess really what is the supply and demand. In addition to that, at least in the United States, I think we’re all looking at the [00:07:00] new Biden administration, secondly, to see where regulatory rules are going to change our tax laws, going to change.
Whether or not the broaden or limit opportunities zones those all impact the real estate market and they do impact, especially in Silicon Valley. A lot of folks have been thinking about putting start-up companies in opportunity zones because not paying tax on that gain is kind of a nice thing if you think about it.
So, there is questions about just regulatory rules and tax policy. Moving ahead. And I, and I think at least in the larger markets, probably in California, New York, and some of the others, we are looking at the disputes among landlords and tenants here in California. We just, yesterday came down and they are going to stop any kind of evictions from commercial, commercial property.
At least for now. So we’re at least through June. So, we’ll see where that leads. That’s going to impact [00:08:00] technology companies, emerging companies that have long-term leases that theirs right now have on their balance sheets. So, we’ll see where that goes as well.
Andrea Moseley: Patricio can we have your opinion as well?
Patricio Prospero: Yes. I’m in agreement with what David said.
Meaning that, of course working from home has brought a number of companies effectively cut costs and eventually having also the possibility of relocating their space or, changing the use of their space at the office. Although when we’re looking at the human capital, I think that this has negatively affected on the long term.
On the long term, it will be negatively affecting also the way how especially in the tech industry people before used to perceive the work, I mean, I remember a few years ago before this pandemic [00:09:00] happened you know, working in a tech company was fun. It was fun job. You used to work with a tech company.
You used to go, for example, working in Google offices. And it was like enjoying the time with your, with your friends, having time to meet each other, to brainstorm, to create new ideas to discuss. Possibly new things to do. And that was one, most, probably one of the key success factor of a tech company, because they used to approach the human capital in a different way.
So, I think that before we use people working in tech company used to identify themselves with the culture of the company and they used to feel more belonging to the company. I mean, they, they, they felt this, this kind of sense of belonging because it was you know, the whole culture was actually sort of transmitted to the, to the person working in those offices. Today, working [00:10:00] from home, it standardized a bit, the experience, the experience.
So Although it could have brought a number of positive financial repercussions definitely it has also an impact on the way how people are living the work experience. I mean, we read statistics and we see that there are people who feel more depressed. People that they feel more the need of sharing. You know and, and maybe meeting other people and exchanging and sharing ideas. And this is something which on the long term it could affect, or obviously, especially for innovative company the innovation, the innovative elements. So, you know, even the fact that sharing experience, it makes, you know, a whole experience for people, you know, to come up with new ideas and innovative ideas.
So, I think that could be on long term something which we should be looking at in terms of human resources. [00:11:00]
Andrea Moseley: Chris, any thoughts?
Chris DeMayo: I think the ripple effect of remote work and the remote work environment is so deep. You could spend hours talking about how this is going to change the way that we work and live.
When you’re in the middle of it, you always think of it as, as probably more of a change than it will be. So, I agree, it’s not binary. We’re not going to go to a full remote environment because there was, there was absolutely very real benefit to being around people. But I haven’t talked with single client that has said we’re going back to a five-day work week in the office.
Those days are over. And that’s an interesting thing to think about because it opens up. So many different possibilities. First of all, you now can have people, you can now seek talent in places that were, are far, far away from your office. You can now accommodate [00:12:00] talent that, maybe you have somebody that didn’t want to live in New York city or California, and wants to live in Topeka, Kansas. And they can’t. So it’s going to open up possibilities. It’s going to change the offices are laid out. It may or may not change the square footage, but it may change the way that they’re designed more collaboration, space, less offices and cubes, because not as many people were going to be needing offices because we’ll be sharing spaces more than we will you know, having permanent spaces or perhaps we won’t share spaces, but the spaces will be substantially smaller.
So, there’s a lot of potential change that’s going to come. And we just don’t know yet what that looks like. You know, some of this is going to be great. For industries, certain industries, and some of it’s going to be very damaging. I’ll give you an example. When you think about where we have gone with online conferences and with video conferencing, you know, everyone [00:13:00] says we’ve advanced 10 years in, in a matter of 10 months that is going to have a very negative impact, a decimating impact in some cases on travel and hospitality, right?
Because business travel. It does not have to happen anymore in the way that it once did. Big important meeting to now happen on video conferences. That changes the dynamic of the marketplace. And real estate is, is, is, is certainly not going to be spared by that you know, to, to David’s point, I think, you know, could people be looking for less space for no space?
Could people be changing their space? Absolutely. And, and I don’t think anyone’s going to be able to fully predict the long-term impact. But it will be a winners and losers impact. I think some, some industries will be very positively impacted. Some will be very negatively impacted. But I think the cultural norms have yet to be set as to what we’re going to be expecting from our, our, our employee bases going forward.
Andrea Moseley: And you’ve [00:14:00] mentioned already how companies are still going public, but that has obviously changed. So, what do SPACs mean to tech companies in the marketplace? Chris, I’ll start with you.
Chris DeMayo: Sure. Yeah. You know, SPACs have been around for, for a long time. But you know, over the last decade or so you really, haven’t seen a lot of activity in this back marketplace in the United States the process of going public is normally a fairly long drawn-out expensive process. It could take years for a company to start the process of going public and actually come to that fruition. What’s SPACs have done is it has created a fast track to going public. You know, the, the simple concept of this SPAC is a, an entity, which is a shell was formed that goes public. It has no activity other than literally having a bank account with money in it. It then goes out and acquires a private company. Which therefore makes that company now a public company [00:15:00] and it can be done in a matter of months rather than taking years to do. So, it fast-tracks the process of going public and getting companies into the public market.
And, and that has created a really frothy market in the United States in terms of potential companies, potential targets of SPACs and having liquidity events.
Andrea Moseley: How are you seeing things in Silicon Valley?
David Sacarelos: Well clearly whether you’re a traditional SAS company, FinTech electric vehicle company, whoever you are the SPACs are offering a really enticing financing option.
Th this is another way to raise capital and it’s it. It’s somebody. Easier, I guess. And then it’s going going through IPO. I, I noted Chris that on Monday, I just in preparation for our call, five companies announced plans to go public through SPAC mergers at valuations over a billion dollars a piece.[00:16:00]
Yep. And, and all the, one of the deals in the last number of last four months, it only one didn’t include SPAC that was a, so there’s quite a bit involved, quite a bit out there. And I think it’s just another, the way I look at us, it’s another financing option, whether it be faster or cheaper, or what have you is another way to go. If you are a tech company to, to raise capital. And so it’s also attractive to private equity companies in California, and then in Silicon valley they’ve already been interested for years in SPACs and you’re going to see many more funded, I think, in the coming years. Yes, there’s reduced disclosure on the front end.
I think the companies have, have a chance to really speak more directly to their investors. Have a little more transparency in what they’re doing. But Chris, I agree I have the question of the day is whether or not these valuations are realistic in the end. So, there is conversation in Congress and [00:17:00] in the federal reserve and some other folks and just making sure that, Whether or not, there should be some more regulation. We don’t know nothing’s happened at this point in time, but as we look at 2021, it’s just another very good way to raise capital. I think that’s a good way to look at it. Yeah.
Chris DeMayo: The risks that I see out there is so many of these companies that are going to be targets of SPACs.
Yeah, they’re not really ready to be public companies, right? So they’re going to snap a finger and all of a sudden they’re going to be a public company. And these companies, the rules for their reporting is no different than a traditional public company. So, you know, are they going to have the internal accounting functions to be able to provide accurate financial statements on a quarterly basis?
Are they going to be able to speak accurately to the street about revenue, projections, and growth. These are things that they were never trained to do as a private company. And usually that’s part of that kind of two-year process of going public is putting that infrastructure in place. And, you know, [00:18:00] how is that going to affect the market in the future when you have companies that just, they haven’t, they’re sort of building the plane as they’re flying it and going into a big IPO.
And now you’ve got the public markets investing into these companies. You know, they’re going to have. You know, step up and it’s going to be, it’s going to be a challenge for the next couple of years, to the extent that these you know, these private companies with thin internal accounting departments are going public.
Andrea Moseley: So, I’m conscious that the situation obviously is rapidly changing. And it continues to change it like an accelerated speed. What are your expectations for 2021? Who do you think the winners and losers will be in the kind of the tech space in regards to the pandemic? Patricio I’ll start with you.
Patricio Prospero: We have seen a number of winners and losers during this pandemic. Whereas before discussing about working from home people, they stay more at home they travel less, they spend more time at their houses. So, all those, tech companies that somehow [00:19:00] provide services to people which stays at home, definitely they are the winner of the spirit of the pandemic. We mentioned before the videoconferencing and how this effectively has impacted the way how we do business and how we actually interact today. When you look at zoom, for example, an application that before pandemic had about 10 million subscribers, And in few months went up to 200 million that makes you understand how these kinds of companies they have actually achieved a big success during the pandemic.
Another winner is for example, the gaming company, as we said, people are spending more time at. And they have to entertain themselves. So, when you’re at home, what you’re doing is either watching a movie. So, there we see that the streaming company like Netflix or Amazon Prime and all these [00:20:00] kinds of, of, of companies, they have actually had a huge success, but also gaming company like Nintendo has more than doubled his sales during pandemic online gaming so those, I think that definitely. Two of the winners. I mean, if we want to identify winners, then there are companies which they didn’t. I mean, in my opinion, they didn’t benefit.
I mean, they, they won in some stages, but they also have lost in some other situations. Just to give you an example. If you take up Amazon, which is perceived to be one of the big winner of of this pandemic, if you look deeply to the situation, they have raised a lot of concerns with people working at Amazon about the work conditions of employees at Amazon which is creating a lot of pressure on on the company.
And on the other side, don’t forget that Amazon, for example, has decided having the online sales business has [00:21:00] also owns one of the biggest cloud systems. So people are so, and a lot of companies, which they actually are in difficulty of payment are finding very difficult to pay Amazon’s fees for what concerns so involve in formation, the cloud.
So that could detailing in a, in a high-risk. So it doesn’t mean that everything, that signal it’s looking good, it’s actually. You know, something which is definitely a win. And there are those that we identify as major loser. Thinking about companies like Uber, for example, the transportation company that they have lost a lot of of business during the pandemic
They had to change their business model. Most of these companies, now they have moved to the business of delivering food rather than delivering person or driving people from, from, from one site to another. And definitely then the company. That we have seen in the past booming like [00:22:00] Airbnb or, or all the internet based tech middleman, what we call middleman.
They have seen a big loss during the pandemic because people are not traveling. So especially tourists to these importance, as we said, Airbnb booking.com. And all the other is they have seen a big loss in revenue during this period because there is no actually you know there are no actually people traveling, so business automatically has reduced.
I think that’s a, in a nutshell, these could be those that, which we could identify as winners and losers. I maybe, I don’t know if Chris or, or, or, or they, they have more, more to add to this, maybe they have a. Or opinions or other examples to provide.
Chris DeMayo: To your point. And if you’re an online business that is able to deliver, you know, a good conveniently you saw a huge increase in revenue in [00:23:00] 2020. And the thing is, that’s a permanent shift because you forced people to adopt a new technology. And now that they have they’re going to stay with it. So, you know, retailers will, will have to, you know, deal with the fact that you’re going to have a lot of people that were once going to walk into a storefront to buy something.
And now they’re comfortable buying online. And, and, and when you think about different demographics, you know, younger people have always been doing that, but if you’re, if you’re in the, you know, the 50 to 70 year old demographic, maybe you weren’t, and now you are, you may not be going back. And that’s a huge, huge buying demographic I think that’s probably one of the bigger shifts that you’re going to see.
I think you know, they’re definitely going to be a winner. And as I mentioned before, I think hospitality is, is going to, it’s going to struggle for a long time travel and hospitality is going to struggle. I think you’ll see a surge when the pandemic is over and people wanting to get their vacations in, but over the longterm, I think you’re going to see business travel is going to, is going to be so different.
And that’s where a lot of [00:24:00] money is made. Quite frankly, not necessarily on vacationers. You know I think that the, the technology community will net benefit from the pandemic and, you know, getting away from the economics. I think one area where I think is, is, is important is, you know, leadership in crisis. You know, when, when revenue’s always going north and money’s always flowing in from investors it becomes easy to lead.
I don’t want to say it’s easy to lead, but you know, you don’t have some of the pressures that maybe are out there. You, you see companies emerge and leadership emerge when there’s crisis, you know, how do you deal with cutting costs? How do you deal with people? Where, what are the decisions that you make?
And I think that having gone through this, the companies that come out the other side will be better, more solid companies that will be better businesses. Because they’ll, they’ll know that it’s not just going to be about burning cash. And how fast can you spend money on, you know on employee [00:25:00] perks it’s going to be about how do you build a business that can survive things that happen, that you don’t see coming.
And I think that that may be one of the most important by-products of this pandemic that, that maybe we’re not seeing right now, but that, that will grow out over time.
Andrea Moseley: David, any final thoughts?
David Sacarelos: Well, okay, so predictions for 2021. I always like when people ask me that question I have clearly, I think what most people feel is technology healthcare, consumer goods are still going to be at the forefront.
I think we have a number of clients who are doing some amazing things in ag tech. The, the field robotics and in farming is certainly something. People are keeping an eye on artificial intelligence, machine learning. We mentioned earlier, just the whole issue of remote work technology. The cloud tech companies are going to be, I think we’re going to do fine.
The FinTech companies are going to do very well. Anything related to enterprise health [00:26:00] and wellness, I think we’ll continue to do very well food tech, if you haven’t already, you’re probably won’t buy a plant-based , is it called the hamburger? I don’t know, but you’ll be buying something that’s plant based in the near future because that’s something that people are interested, at least in the United States technology around the insurance industry will be, will be key in 2021.
We know in the bay area here in the Silicon Valley and mobility companies, your electronic electric vehicles. A lot of demand there. And I think there’s going to be a lot of money put into that, into that technology space retail, health wellness and anything connected with supply chain technology can make it easier to move things from here to there and not have to be so the hold into a, a physical infrastructure that’s some thoughts that I have at least maybe I’ll leave it there.
Andrea Moseley: all very much for your time. And thank you all for listening. [00:27:00] Thanks for listening for more information about this topic and other Cross-border business insights visit www.hlb.global/insights
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