Problem: I recently came across a seemingly simple Tweet by Nick Huber. In it, he describes his PE roll-up strategy of self-storage facilities in the Northeast, writing “We buy small mom-and-pop self storage facilities in rural / tertiary markets in the northeast. Wrap them in technology, increase efficiency / profits.”
Are there other applications or industries for this similarly simple strategy?
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Solution: This business would focus on finding industries that have not been disrupted by technology (just as Nick did with physical storage and real estate) then purchase them and, in combination with technology, optimize operations for a profit.
Just off the top of my head, there are three of these industries that may benefit including health care, traffic, and the judicial system:
The Health Care System. As described by TechOpinions, “the actual medical care system is not significantly more efficient than it was 10 or 20 years ago. Yes, there are now electronic medical records, and some consumers have access to their health history online. But the process of booking appointments, getting a referral, determining the price of a service, or determining the efficacy of a physician or the quality of a hospital or other treatment facility remains a rather arcane process.” While capital intensive, is there a potential alternative or opportunity to roll-up a healthcare system in a rural part of the country and begin experimenting with tech optimization? There are currently over 6,090 hospitals in the United States with 2,946 Nongovernment Not-for-Profit Community Hospitals and 1,233 Investor-Owned (For-Profit) Community Hospitals. Given that there is a market, this business would double-down on capturing a larger more efficient share of the investor-owned community hospitals that exist.
Traffic. While technology has revolutionized much of transportation (taxis, car technology, and more), one area that hasn’t seen any improvement is traffic. There are already some companies hoping to play in and conquer this space by developing technologies like Hyperloop, “system can propel passenger or cargo pods at speeds of over 1000 km/h. That is 3x faster than high-speed rail and more than 10x faster than traditional rail.” As recently described by HyperloopTT CEO Andrés de León in a testimony to the US Congress, “Hyperloop is less expensive to build at $54 million per mile, significantly less than the $150 to $250 million per mile price tags of high-speed rail and MagLev… Hyperloop is a sustainable next-generation technology, independent studies estimate that along a single 468-mile route a HyperloopTT system could replace the emissions of over one million cars annually.” To compete, a technology-enabled private equity company could purchase existing railways and reenable them through deep technical integration.
The Judicial System. Mark Lowenstein recently described his time on Jury Duty, writing that, “Most aspects of the legal process haven’t changed all that much over the years: how lawyers work, how cases are tried, what happens in a courtroom. It’s almost quaint. I served on a jury for several weeks in 2016, in a courtroom more than 100 years old, and it struck me that the experience of a juror, and the whole process or preparing and presenting a case is essentially unchanged. Sure, briefs are typed on PC, and evidence is catalogued electronically, but it does seem that the legal industry is a major contributor to keeping pen, paper, and three piece suits alive…” What would a tech-enabled law-firm look like? Perhaps in the courtroom, AI could present lawyers with the best ways to respond to arguments through smart displays. Similar to how sales-enablement technology can run real-time sentiment analysis and dissect responses to sales prospects, lawyers may benefit from a “proactive argument platform” that creates ways to respond using the best evidence to an opponents concerns.
While broad, I argue that there are loads of potential in low-tech industries that could benefit from being rolled-up and tech enabled.
Monetization: Pricing optimizations to make existing dollars less cost-intensive.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)