There’s a neat trick serial entrepreneurs and venture capitalists use to figure out which start-ups to invest their money and time into. They look at the industry within which they would evolve, and ask themselves: “does this industry operate in the same way it did back in the 1980s?”. That’s called the “1980s Test” — because people in the know suck at marketing (and vice-versa). It helps highlight swathes of the economy ripe for disruption, be that through technology or business model innovation.
If you think there’d be few candidates to be identified this way, you’d be wrong. Staggeringly wrong. There are dozens of such industries, all waiting for the next big thing. Below are five such examples, with specific examples on how they could be fixed, representing billions ripe for the taking.
A lot of the ideas presented are idle (and mostly satirical) reflections, and a small amount of thought might be enough to tear them apart. The objectives of this article are not to lay out exact blueprints to a better future, but to incite thought and promote conversations on how innovation might best happen.
Related: 20 Technologies and Innovations to Know About From 2022 to 2030
1. Massage Services
A few numbers:
US Market Size: $16bn
Number of Businesses in the US: 355,000
Industry Employment in the US: 490,000
What’s wrong
What’s the one thing mediocre business hotels, over-touristed resorts and unimaginative boyfriends on Valentine’s Day have in common? They all think offering a massage will be a great way to blind you to their flaws while they try to get in your wallet/pants. And that’d be a pretty good idea… if it was the 80s.
Massage parlors have not changed very much over the past 30 years. First, you take an appointment over the phone. Once confirmed, you head to a bland building, and proceed down to a dark basement. You’re welcomed by people in robes, too much humidity, and the drilling sound of “soothing music”. You’re then led to a room where you strip naked and are subsequently assaulted by one or two people whose faces you’ll likely never see. Medical massages offer better experiences, but not by much.
Mix this poor experience with a lack of insurance coverage, an imploding revenue base due to COVID, and a poor industry reputation due to Thailand-based actors and bad Hollywood comedies, and you have the perfect storm: millions are up for the taking. 160 of them, if you manage to grab just 1% of the US market (and more, if you implement the idea presented below). This industry also has no major players with a market share greater than 5%, so it should be easy pickings… for the right team.
Proposed new business model
For once, more tech is not the answer. Rebranding and pivoting, however, is. Specifically, I would rebrand the massage industry around its ability to fix an issue ever-present in everyone’s life: our collective lack of sleep. COVID, wars, politics, climate change… it’s hard to fully give oneself to Morpheus’ embrace when the horsemen of the apocalypse are running circles in our heads. It affects all of us, and the cost of bad sleep to the economy is astronomical ($411B a year in the US alone). Solutions however do exist. One of them, according to the National Sleep Foundation, is massages, which can trigger serotonin, a neurotransmitter that induces calm feelings.
From there, the way to disrupt the massage services industry seems obvious: create a holistic experience around massages in a space you could call “the Sleep Clinic”. You’d sell sleep aids, offer sensory rooms, incredibly cushy couches for after the massage… You’d be surprised how much people would be willing to pay for a really good nap. As society continues to descend into madness, good sleep is becoming a status symbol, much like Teslas and AirPods. As such, I’d advise making the whole experience Instagrammable to help do away with most traditional marketing costs. Handsome, outgoing massage therapists with strong personal brands would greatly help with this. You could also tap into a wellness trend by providing long-term massage services that do away with “one-shot” effects, train people to be able to help each other at home, link the massages to therapeutical services provided by other professionals, create partnerships with therapists… There are many, many ways to improve sleep, but no one place which brings them all together.
If you could reduce sleeplessness in the US by 1%, and capture 10% of that value, you’d stand to make $410M ($411B x 0.01 x 0.1). Go to any venture capitalist with that number, and they’ll give you funding to create moats in an industry that historically has low capital intensity. Good luck!
2. Higher education
A few numbers:
US Market Size: $568bn
Number of Businesses in the US: 2,400
Industry Employment in the US: 3,085,000
What’s wrong
The higher education industry is absolutely broken; we’ve known this for a few decades. Public schools, private schools, community colleges, for-profit universities, business coaching, business certification and IT schools, trade and technical schools, fine arts schools, sports coaching, language instruction, tutoring… There are so many different ways to teach, yet few of them have changed much over the past 40 years.
That’s in part because we’ve built and maintained a system that rewards educational scarcity (we can’t all pay an Ivy-league education) as a way to uphold and reproduce socio-economic heritage. This is strengthened by the natural limits of classrooms space and the artificially limited number of professors. It’s also a business that is naturally limited by time: it’s common to be educated from a curriculum made 5 years prior for a job that won’t exist 5 years later.
But educational services do not need to be this way. The days of having a single teacher for 30 to 100 or so students can be over… if only we find the right formula.
Proposed new business model
The key question we need to ask ourselves is simple. How do you beat Harvard? The answer is as easy as it is difficult to implement: you turn their strengths into weaknesses. That means changing four things:
Doing away with the unfairly high price tag through performance-based pricing: make the teachings free (at first), and take a small percentage of earnings after a few years, once students have begun their careers unburdened with debt. That way, the school has an incentive to provide great teaching, and students can be sure the admission process is fairer than it currently is.
Removing old curriculums that may quickly become redundant: switch from pushing knowledge to students to pulling topics that will be favourable over the next few years through interviews with top companies, scientists, and executives. Doing this will also ensure students are quickly employable, and thus ensure future revenues.
Implementing life-long subscriptions: by implementing performance-based pricing over many years, we also open the door to life-long subscriptions. This means that for a nominal fee, you could go back to school for a few months to acquire new skills. I’m sure employers would love that idea.
Removing tenure: teachers should be free to come and go to allow for as much elasticity as possible. Giving them the possibility of recurring earnings long after they’ve stopped teaching will ensure some of the best will at least be curious enough about the endeavours to give it a non-binding try.
At the end of the day, it’ll be difficult to remove scarcity from the education industry. This is why full-digital learning won’t ever be the disruptor some envision. But if you make an educational entity exciting enough, as highlighted above, we might just be able to move on from the past, and into the future (though I do acknowledge the proposed solution is somewhat over-liberal).
3. Amusement Parks
A few numbers:
US Market Size: $11bn
Number of Businesses in the US: 415
Industry Employment in the US: 123,000
What’s wrong
Amusement Parks are just like cruises and swimming pools; they’re an opportunity to pay way too much to be way to close to someone else’s half-naked, sweaty child. Mechanical rides, water rides, games, shows, themed exhibits, refreshment stands… amusement parks are just one long line after another. Altogether, it does not make for a glowing experience.
But, because creating an amusement park requires a lot of capital, and the industry thus has high barriers of entry, none of the key players have been pushed to innovate on said experience since the 50s. This has also encouraged some unhealthy consolidation. Another weakness in the industry is the way it makes money: much like car dealerships make money on financing, amusement parks actually make more money from merchandise, food, and beverages than from admissions, rides, and games.
All this means the industry is now over-ripe for disruption.
Proposed new business model
Who are amusement parks competing against? That one’s easy: it’s Netflix. And how do you beat a digital entertainment universe in a physical entertainment universe? By combining the two as much as possible, using a few modern tricks. That’s right, I’m about to inject blockchain and NFT lingo into this.
As standalones, amusement parks are terrible, we’ve figured out that much. But what if they existed as a connection to a much wider realm, one that would further intertwine brands and consumers?
Let’s say that brand is Nike, for example. You go and buy a pair of Air Max. With that pair, you get a unique, non-fungible token. You use that token to log into an app. It’s a one-time token (blockchain!), so don’t lose it. On the app, you can purchase some limited editions products, or some of your favourite sports-person memorabilia. If you get these, you get a few more tokens. You can exchange these tokens to meet Lebron James! And so on. Now, let’s say that you also create an entire experimental around the brand — a track field where you can virtually race athletes, a small stadium to see shows, a ride centered around Space Jams, competitions… and in those competitions, you can win tokens! Which you can use in the park, or in store, continuing this happy, unbridled, techno-capitalistic circle. And it’s all stored in your Nike wrist band so you don’t have to worry about a wallet or a login.
Stand-alone parks are dead. But I believe that, as part of a larger universe, they can be an incredible brand and loyalty-building asset.
4. New Car Sales
A few numbers:
US Market Size: $1tr
Number of Businesses in the US: 22,000
Industry Employment in the US: 1,253,000
What’s wrong
I’ve never bought a car. I think they’re pretty to look at… but dumb (just like me?). I’ve however spent a significant amount of time in dealerships, where most new cars are bought, and I truly do not understand how they make any money.
The test drives are too short. The salespeople are overly pushy and under-trained. The marketing material hasn’t changed since the 80s. The true benefit of car ownership (freedom and social status) is hidden under a thin veneer of metaphorical motivational messages. Cars are sold at a loss and the money is made back through the financing provided for the purchase of said cars. Parts and services are expensive to the point of being insulting.
As far as I understand, the only reason the industry is still alive is because the only thing Americans hate more than the environment is public transport. This could have changed: the industry had 2 years of COVID to transform their whole operations and disrupt their market. They didn’t. But it’s not too late.
Proposed new business model
Today, dealers principally compete on new vehicle prices, as well as warranty, credit offerings, and sales experience. Why not turn this on its head, and offer a great experience with no warranty, no fixed price, and no credit? This would be possible for a company giving its cars away for free.
Now, why would a company do that? Surely, not out of the kindness of its heart. A deal would need to be struck. I propose that this deal revolve around electricity; if you qualify to get a car for free, you need to repay it by allowing a charging station to be installed (at your expense) near your property. People who paid for their cars from the same brand would be able to use the charger (and your electricity) for free, until your debt is repaid. If you live in a busy area, that may even take a relatively short amount of time.
This may seem dystopian (rightly so), but could be beneficial to society over the long term. Firstly, it would help create more charging stations around the world, something that is clearly lacking and slowing down the adoption of electric vehicles. Secondly, it would encourage people to install solar panels or other renewable energy sources on their properties to benefit from cheaper electricity. This would help the transition from combustion engines to electric vehicles while benefitting people that may not be able to afford a car outright over the long term.
This would obviously be a temporary offer (it would not work in the long term). Yet, the new cars dealers industry is highly fragmented and experiences a very low level of market share concentration: this is an opportunity for the right actor, as a new model could be implemented and adopted before the competition has time to react.
5. Movie theaters
A few numbers:
US Market Size: $9bn
Number of Businesses in the US: 5,300
Industry Employment in the US: 79,000
What’s wrong
When was the last time you went to the movie theatre? If you’re anything like me, it’s been quite a while, mostly because of COVID. And yet… we don’t miss it? Weird, how we’re not eager to go back to an over-priced seat, eating over-salted pop-corn, in front of two teenagers fondling each other, to see a movie that’ll come out on Disney+ in a week.
Revenue for the movie theaters industry is estimated to have declined 60.5% in 2020 due to the COVID-19 (coronavirus) pandemic and social distancing measures, which have left theaters sitting empty for months. The numbers have gotten better lately, but not by much. COVID gave us a taste of what streaming could look like, and we’re not coming back.
There is however a way to improve the industry, and potentially save some of it from itself.
Proposed new business model
Some movies are better seen on a big screen, with surround stereo (looking at you, Dune). But as mentioned above, the experience is just not worth it today. How do we make it worth it? Subscriptions? That’s been tried and failed. No, I believe the only way to save movie theatres is to have them cater to the 90 to 95 percenters.
These are the people who are too rich to want to rub elbows with the average people, but too poor to have a home cinema — and they’d pay 200$ for an actually enjoyable night on the town, which is how much movie tickets should cost from 2022 onwards.
I know it’s not pretty. But paying 25$ to be surrounded by too many other people makes the experience in the movie theatre far less enjoyable, and has shown to be unprofitable. By charging 100$+ per ticket, you:
Turn the experience into a status symbol
Compete against restaurants instead of streaming platforms
Un-crowd the theater for a healthier experience
Make the expensive snacks seem cheaper in comparison, thus preserving or increasing high margins
In one phrase: by changing the price tag, you change the paradigm.
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As mentioned above, this article is just a way to have a conversation around how we might best improve imperfect industries, nothing more.
Regardless, if you do create a company based on these idle thoughts… please don’t involve me; I want nothing to do with either current or future unicorns.
