The Next Unicorns May Be Old Businesses with New Tricks

In case you have not noticed, technology is everywhere today.  While many venture capitalists and firms focus on “pure play” investments, we at Revolution have found an interesting niche by thinking outside the box and backing more traditional companies that leverage new technology to drive efficiency and better business practices.  This usually results in better profits – remember those?

Somewhere along the way we have seemingly forgotten that the point of business is to make money, not burn it.  Finding great assets that can be enhanced by modern technology is a great hedge on the craziness that surrounds us today.

There is no shame is backing real businesses with real profits.  Remember, Starbucks, Whole Foods, FedEx and JetBlue are venture-backed companies too.

Today, all of these companies are utilizing technology to massively upgrade their business models.  These large incumbents, like those before them, are on the verge of being disrupted too – and, yes, while it may not constitute a “technology investment” – backing the new breed of nimble attackers run by 30 somethings (who do not remember a life without AOL!) could still generate substantial returns in the future.

What technology is teaching us is that life in the future will be more convenient, likely have a smaller footprint, and completely on demand.  Traditional industries will not disappear, they will get more efficient – everyone should want to invest behind that idea.

As our CEO Steve Case likes to say, we are about to enter the third wave of the Internet, meaning it will be seamlessly integrated it into everyday life. The companies associated with the third wave will disrupt more traditional sectors like health care, education, transportation, energy, financial services, and food, and there is huge opportunity for venture capital investment.

Take for example, our investment in Sweetgreen.  Many asked why we did it.  On the surface, it is a restaurant, but the thesis was actually pretty simple and perhaps more nuanced than you think.  First, the demographic trends are in our favor and in Sweetgreen, we believe we found the QSR attacker – healthy, affordable, and with great vibes.  But, that was not totally the “it.” Today, almost 30 percent of orders are coming via mobile phones. You say, “Cool.” I say, “Imagine what that could do to the economics of our business?” There are no hoods, no grease traps or vents – it can operate out of small boxes and go anywhere. If mobile and online ordering continues to be a big driver of our success – it can go smaller, be more efficient and perhaps not sacrifice (and likely increase) any revenue or profit at new locations – hard for ShakeShack, Chipotle, or others to replicate given their kitchen needs.

Hopefully, I articulated my point that great assets can be enhanced by modern technology and we at Revolution will continue to find and back more traditional companies that leverage new technology to drive efficiency and better business practices.


Evan Morgan

Evan Morgan is a Partner at Revolution Growth, which invests in and actively helps build disruptive, innovative, and significant new consumer companies.

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