Ken Frieze

COVID-19: A personal message from Ken Frieze, CEO


Date March 23, 2020

I’m one of hundreds of Gordon Brothers employees now working from home as we continue to service our clients remotely. I hope you are safe and healthy. No doubt you are inundated with messages of how everyone is taking steps to protect their family, neighbor and co-worker as we grapple with this unimaginable new reality. I’d like to add some additional perspective of how we at Gordon Brothers are thinking through this rapidly changing environment.

First, we see this as a 3-part crisis: humanitarian, economic and informational. A declared pandemic only weeks old, it’s clear there are multiples of COVID-19 cases that aren’t in the official numbers. While many of the mandated or voluntarily instituted extreme social distancing protocols are set to expire in April or May, we believe that creates a false expectation of return to normalcy. We don’t think an upswing will be measured in weeks or months, but rather quarters. We are preparing for that and suggest you do so as well. So, first, take care of yourself – both physically and mentally. Help stop the spread so we can flatten the curve and keep from overwhelming our healthcare systems. Support isolated seniors with food and phone calls – at a distance. Show gratefulness to those on the front lines: healthcare workers, supermarket and drug store workers, package delivery workers and others showing up to do their jobs in times when many of us have the greater luxury of staying home. 

At Gordon Brothers, we are fortunate not to have any diagnosed COVID-19 employees. That said, we all know friends and family either impacted directly by the disease or its indirect economic consequences. As such, we have created a $1 million Coronavirus Emergency Fund to help those most impacted. We have also doubled the number of volunteer days our global staff have to use to give back in their local communities, as the need for support will only grow. 

The medical need for extreme social distancing has led to an economic crisis that is rippling through nearly all facets of the economy. We have yet to fully see the extent of the cascading impact. The good news is the underlying economic picture was healthier than during the Great Financial Crisis a dozen years ago. The bad news is we haven’t seen this kind of drop in economic activity in nearly 100 years. We’re in a new paradigm nearly overnight without much preparation. So, I have a few suggestions for you: 

  • Support small businesses impacted by buying gift cards
  • Support the social net by making donations to the charitable organizations on the front lines
  • Keep up with commercial activity by working remotely if you can and at a distance if you can’t 

Given how rapidly the situation as devolved, we are also faced with an information crisis, or an “infodemic” if you will. We’re in uncharted territory with little precedent to lean on. We already live in an age where there’s been a demise of objective truth, so critically evaluate information you hear from different channels before you forward it along. 

Second, we see current economic condition as, basically, frozen. Work stoppages in travel and leisure, out-of-home entertainment and in-person services will lead to further layoffs. Non-essential businesses are closing their physical doors, leaving some business models unaffected, others strained and some broken. We see this as “COVID-19” holding the world up for a multi-trillion dollar ransom. Those with deep pockets will have to bridge the world to the other side: governments, large companies, equity owners, lenders and landlords. Companies are drawing down billions from asset-based lenders who are seeing their outstanding jump up just at a time when their underlying liquidation models are temporarily null and void. Companies are prioritizing payroll, holding rent and getting relief from lenders to avoid bankruptcies. 

However, here’s the good news. Medical recoveries are outstripping new cases in countries hit early. There seems to be a very low chance of getting COVID-19 twice, ultimately creating greater social immunity as we all wait for a vaccine next year. While it will likely take western countries longer than eastern countries to stem new cases, this too will pass. Keep in mind, the underlying global economic activity was sound, albeit long in the tooth, prior to COVID-19. We believe there will be a vibrant economic recovery in 2021. Government and central bank stimulus, bailouts and deferred regulation will mitigate some of the most severe damage in the meantime. While some of this forced paradigm shift will accelerate bankruptcies for some companies in the short term and change business models for others in the long term, this shift was already well underway in many sectors. 

In retail, we don’t see ecommerce fully filling the void. In fact, non-essential ecommerce will decline as consumers sit on the sidelines. However, before store closure mandates kick in or when they are lifted, shuttered retail stores will send demand to the remaining open retail stores. Supply chain shortages have already started to shift to supply chain excess as retailers cancel orders and China comes back online. Even in an extended social distancing timeframe, some consumers will eventually revert back to shopping non-essential retail as impatience with stay-at-home efforts leads to self-rationalizing non-essential shopping using safe approaches adopted for shopping essentials. Pent up demand – minus stockpiling – will help retail recover for non-seasonal goods. 

Here at Gordon Brothers, we’ve focused our resources on taking care of our employees and clients first and foremost. We’re working together by staying apart; doing our part to flatten the curve. Make no mistake, Gordon Brothers is open for business. Our offices in North America, South America, Europe, Japan, and Australia may be closed, but our team is fully equipped to support you from their homes. You have counted on us for 117 years and we are here for you now. We have three dedicated task forces working on COVID-19 impacts and sharing these insights with clients daily. Please reach out to us for advice and for capital. We are all in this together and we will come through it together. 

Take care and stay safe. 

Ken Frieze