AGILEVC My idle thoughts on tech startups

December 5, 2007

Yes, it’s been a little while (ok 2mo to be exact) since my last post. Busy time of year… I plan to make more frequent blogging a New Years resolution :)

In recent weeks, my mind has been lingering on some various areas where consumer use of the internet has the potential for transformative change upon a large industry. In the last 10-12 years the consumer web has had very material impact in a number of verticals. Top of mind for me are:

1) Media & Advertising –> creation, distribution, and monetization of all sorts of content types. Traditional industries impacted: newspapers, TV, music, etc. Mega startups created: Google, Yahoo, YouTube, Monster (classifieds advertising).

2) Retail Commerce –> retail sale & distribution of all sorts of consumer goods. Has obviously impacted the retail industry most directly, but has indirectly impacted industries like transportation (don’t believe me?). Mega startups created: Amazon, eBay.

3) Personal Communications –> IP-based interpersonal communications. Traditional industries impacted: telecom primarily. Mega startups created: Skype, Hotmail.

4) Travel –> coordination and provisioning of consumer travel services. Traditional industries impacted: directly travel agents, but to a lesser extent providers as well (e.g. aided business models like JetBlue). Mega startups created: Expedia, Priceline, et al.

5) Retail Financial Services –> using the web to reach or empower consumer’s financial transactions. Banking, brokerage, and payments all impacted dramatically though incumbents benefited substantially. Mega startups created: E*Trade (recent tribulations aside they had a $10B mkt cap just a few months ago), PayPal, LendingTree.

I included only startups which had consumer facing products or services above, but there have of course also been numerous large successful companies built from various pieces of infrastructure that powers the internet (Akamai, DoubleClick, et al). My point in thinking through all of this wasn’t simply to regale the last decade or so of the consumer web. Rather, as a VC investor I’ve been trying to think conscientiously about what the next 5-10 years might hold.

I’ll be the first to admit… this is the most macro of macro of views here, we’re not talking 30,000 feet but more like 100,000+. So the below isn’t a list of specific ideas to start a company, but rather a very broad hunting ground to think about. What are conceivably some areas which might be fertile ground for transformative change in an industry, and the attendant opportunity to build some billion dollar plus startups? Here’s a first pass from the things that have been rumbling ’round the back of my head.

1) Consumer Healthcare –> most participants in the healthcare value chain (payers – insurance companies, providers – docs and other HC professionals, institutions – hospitals etc) all seem pretty convinced that consumers will play an increasingly important role in their own care, and I tend to agree. The future will likely include more consumer directed healthcare, personalized medicine, individual insurance (instead of getting it thru our employers), and other trends which put us at the center of our own healthcare. This area already has one big startup that’s been created (WebMD) and several promising newer entrants (Healthline, PatientsLikeMe), but it’s hardly been transformed and I’m hopeful that some of the best is yet to come.

2) Real Estate –> yes, I know the current state of residential real estate here in the US is pretty grim right now what with the subprime mess, declining home prices, and the rest. But it’s times like these that are often the best to attempt meaningful change in an industry. Some companies off to a very positive start: Zillow, Redfin, Trulia.

If you’re sitting on the next great idea in either of these areas, call me. Seriously though… what are some of the other areas still ripe for dramatic change?