When Barbara Corcoran launched her real estate business in New York City in the 1970s during the recession, from the outside, it may not have seemed like a smart move. “You couldn’t give apartments away in New York. I had a beautiful apartment in the Dakota and no one would take it from me. But five years later it was worth probably $6 million.”
Corcoran survived that recession by playing the long term game, seizing opportunities, and setting herself apart from the old real estate brokerages that weren’t able to adapt. The entrepreneur, investor, and Shark Tank star is advising her own businesses, and now having to reinvent her own, thanks to the economic fallout from Covid-19. While Corcoran sees entire industries getting hit hard, with some not being able to survive, she also sees opportunities. Corcoran shares her advice on how to pivot, what industries are going to be the big winners, and how the future belongs to businesses that learn how to thrive online.
Sara Bliss: Where are the opportunities during this time where the world is in quarantine?
Barbara Corcoran: I think the opportunity is in thinking creatively always. I think the direction is for companies to figure out how to bring their business online. How do they partner with other businesses to create something new? How do they reinvent what they offer and how they deliver it to their customer? How do they develop new customer bases? That’s easy to say, not so easy to do. But what’s great about this time, on a positive note, is it’s an opportunity to have the time to resize your business, to really analyze and see what your main streams of income are. You have to size up where your business was before, what you’re going to lose, and how you’re going to replace it. And you have to regroup and retrain your staff and see what you can do in house. We have the time now to get really smart.
Bliss: Which industries do you think will be most impacted by the quarantine?
Corcoran: Now that people have learned to rely entirely on online orders from Amazon, I think retailers are going to be totally crippled—both losing the revenue and they won’t be winning their customers back. Next, are restaurants. They have very high rents and they have had to put up with no customers for a long time. Most of them have not successfully reverted to takeout. I think they are going to have trouble opening back up. Which brings me to the people who I think are going to pay the biggest price: the commercial landlords. They own a lot of retail spaces, shopping centers and office spaces. They’ll be hardest hit because everyone is realizing that their workers can efficiently work from home. I don’t think that’s going to stay as is, but it’s never going to go back. Large and mid-size companies are going to downsize. They’re going to renegotiate out of their leases and get smaller spaces. Retail owners are going to be hard-pressed to figure out who else goes on the ground floor space. Shopping centers are going to be dead.
Bliss: What advice do you have for people in restaurants, retail, or commercial real estate? Is there anything they can do to offset their losses?
Corcoran: They’re going to have to reinvent their space use. Anybody who owns any real estate that houses business is going to have to come to terms with lower rents or how to find a different use of the space they have. I own a couple of buildings in Manhattan in prime spots in the West Village. In one of them, a big retail tenant just moved out and I have a little leeway to rent it. My concern is I don’t believe we’ll get a restaurant or a good retail tenant in there. So I’m going to revamp it into residential space, which means I have to go through a zoning process, which isn’t easy and it’s expensive, but I’m already writing off that retail space. I don’t expect to get the same rents, but I’m thinking of building small pods for single people to live in with common spaces, much like WeWork. I’m going to try one and see if it works.
Bliss: It feels like this whole period is going to lead to a lot of changes and reinventions for entire industries.
Corcoran: I think large business conferences are going to be a thing of the past. That whole business is going to convert to webinars, sold in smaller chunks of time by speakers. I think the event planners are going to have to learn what the tech needs are going to be, how the promotional materials are going to have to revamp. I don’t think businesses are going to have thousands people travel to large events anymore. They will realize that they were able to go without that enormous expense and they’re going to have to bring the cost down. I think the great majority will move online.
Bliss: What industries besides Amazon do you think will benefit the most right now?
Video games went up by 60%. They’re not going to come back down. Now older people are playing them. It used to be just young men and kids. Now everybody is using them as a means of socializing. Zoom or any video conferencing, really anything that’s collaborative and online is doing well right now. All the big tech players are going to benefit. They’re the winners here.
Bliss: What moves and decisions might help entrepreneurs make it through this crisis?
Corcoran. A lot of businesses will not make it through. They’re the same businesses that would not have made it over the long haul anyway. Of the ones that will make it, I think the difference is they hit the floor running and worked on what they could change. They refused to worry about what they couldn’t change. Instead they said, “Well, we can’t change that, but we can change this. Let’s go go go!” It is an attitude that you have to develop, where you just focus on what you can control. Whereas my weaker business are obsessing about how the cards are stacked against them and you get what you focus on.
Bliss: What are the financial moves that entrepreneurs should make right now?
Corcoran: I encourage all of my entrepreneurs to take advantage of the stimulus package and not let their staff go. If they get the package and just hold on through June 15th, that loan is forgiven. Most people don’t know about that, but my real winners knew about it before I did and had already gotten their paperwork done. Getting the cash flow you need to get through and keep your staff on is very important. A lot of them let people go right away and then think, “Ok, what can I get?” They don’t pause and think, “How can I keep my people on board so we can move this business ahead?”
Bliss: How are some of the businesses you are investing in handling the crisis?
Corcoran: Pipcorn rolled out three new product lines a few weeks ago and couldn’t put them in the store shelves, because the stores aren’t stacking new product. But now, they they’re partnering with nonprofits and delivering all those goods to hospitals and nursing associations. It’s very nice because everyone has these great treats to snack on, but it’s also good for Pip, because they’re getting their product out and they’re putting it in a positive light. That’s turning on your feet. Now they’re manufacturing at losses, but they know they’ll make it up in the long run. Boho Camper Vans are offering steep discounts to keep their vans busy and families are renting them to head to the mountains and live in the van. They almost symbolize an escape. They’re in the right place at the right time, but they’re aggressively marketing it to their customer base and they’re doing so well with it. The commonality in those examples is they’re hustling and thinking of a different way of doing their old business. Probably the only business I have with sales up immediately is a small business in South Carolina named Daisy Cakes. Her sales are going through the roof, because she’s making a new cake a week. People love it.
Bliss: What about businesses that launched this year? What advice do you have for new businesses trying to start in this chaos?
Corcoran: This is a perfect time to launch a business because the world is open to everything new. Business is being rewritten. It’s a blank slate. People are going to be totally open to newcomers and new ways of doing things. They’re going to be looking for other businesses to do it cheaper, faster, and easier—whatever the “it” is. I opened my brokerage business during the 1970s recession. You couldn’t give apartments away in New York. Because I was lucky enough to open my little desk and phone in the worst market, everybody was open to a newcomer and what I had to say. Nobody stuck with the old timer anymore. That’s what’s going to happen here. Nobody is going to put out the big bucks again for what they did before. It’s the perfect time to launch a business. The world belongs to the new right now.