Investing In the Everyday Economy
Internet as a “Supertechnology” and its Second Order Effects
Our central investment theme here at NextView is the “Everyday Economy”. Specifically this is the digital redesign of broad categories of everyday living, thanks to cutting edge technologies and innovative business models.
When we first announced the Everyday Economy theme about two years ago, we wrote in some detail about Internet connected computing… its origins, historical parallels to other civilization-shaping technology waves, and how the second order effects are just now playing out 20+ years after the internet’s emergence.
If you’d like to understand more of this context you can look back and read here. The short version is that “super technologies” like railroads, electricity, automobiles, and now internet connectivity don’t necessarily follow the patterns of “normal” technology innovation waves. These super technologies have an outsized impact on society broadly and these impacts play out over many decades.
Electricity was originally conceived as a way to provide lighting to replace candles and oil burning lamps. But many decades after Edison invented the lightbulb, electricity was reshaping everything from industrial production to transportation to even architecture (high rise buildings were made possible by the electric elevator). Similarly, the automobile gave rise to drive-through fast food and the suburbs long after cars started to be adopted.
Internet connected computing has made micro mobility companies’ (Lime, Bird, etc) business models possible, thanks to geolocation, metered usage, and remote electronic billing. Distributed workforces are becoming the norm thanks to software tools like Slack and Zoom. Consumer choice has never been greater across countless categories from mattresses to soap, thanks to marketing and distribution models made feasible by internet computing.
What Is the Everyday Economy?
As individuals, the things we do and the purchases we make account for 70% of U.S. GDP. This activity is clustered in a handful of areas: home, transportation, food, work & money, health, apparel, and entertainment. Each of these categories represents a market opportunity in excess of $1 trillion, and each of them is ripe for disruption by digital technologies.
The digital transformation of the Everyday Economy isn’t solely limited to how we learn about or shop for products and services — it’s now fundamentally changing how we experience them.
Managed marketplaces, lab-grown “meat”, robotics, and on-demand delivery networks are changing how we experience the simple pleasure of eating a meal. Other companies are rethinking our concept of home and lodging. The physical office hasn’t been rendered obsolete by any means, but various digital collaboration tools are fundamentally changed how and with whom many people work on a daily basis. Uber and Lyft aren’t simply making it easier to hail a taxi — these services, along with the potential advent of autonomous vehicle technology, are reshaping the entire notion of car ownership and personal mobility.
The internet has transitioned from just simplifying the marketing funnel to redefining the actual products and services we consume.
While our lens on the Everyday Economy is focused on our actions as individuals, it’s not constrained to B2C companies. There are countless B2B startups that are enabling this digital transformation and how consumers experience the Everyday Economy. For example, Attentive, is enabling retailers and brands to engage with their customers in new ways. Similarly Ocean Freight Exchange is reshaping how the raw inputs of countless goods (like grain, chemicals, or iron ore) make their way across the high seas. Consumers may only experience these products indirectly, but they’re shaping their everyday experience of shopping and the goods they purchase.
Interested in reading more about Everyday Economy? Here are a few posts we’ve written that go a level deeper on our thematic approach:
Deeper dives in some of these key categories:
- Work & Money
- Why the Everyday Economy Isn’t a Vertical Strategy
- Why Investing in the Everyday Economy Isn’t Just a Consumer Strategy
How We Plan to Invest in the Everyday Economy
In some respects, our thematic focus on the Everyday Economy and its digital transformation isn’t particularly new. Over the last several years, we have been investing in founders seeking to reshape many aspects of our daily lives:
- In food, MealPal is delivering jaw-dropping value for urban workers’ daily lunch plans, and Upserve helps restaurants delight their customers.
- In apparel, companies like Dia&Co and ThredUp haven’t just made shopping easier, they’ve changed access to apparel and what people actually wear each day.
- In transportation, Optimus Ride is looking to reshape how people get around and Ocean Freight Exchange, which we previously mentioned, is reshaping oceanic bulk shipping of everyday goods.
- In home, Grove Collaborative makes it easier to craft a healthy, beautiful home environment. Loftium is changing the economics of apartment rental and Properly is using technology to dramatically simplify selling a home.
- In health, Mighty Health is bringing digital technology to cardiac rehabilitation and Devoted is reshaping how seniors stay healthy and paid for care.
- In entertainment, The Nudge is helping consumers discover new lifestyle activities and Skillz has created a platform to bring eSports to everyday casual mobile games.
There are a few common lenses through which we are thinking about these companies and others that we are looking to invest in:
First, are the founders looking to redesign or just improve a current solution? Improvement is linear and incremental. Redesigns look more like step-function shifts, requiring founders to approach problems very differently. Sometimes, it isn’t obvious from the start that the company will lead to a redesign, but it’s very much part of the company’s Golazo.
Second, we get excited about companies that are redesigning the everyday. We think of this as products that are highly habitual, or that consumers interact with on a daily basis. Sunrise, a calendar app we invested in from our first fund, was used every single day by millions of consumers prior to their acquisition by Microsoft. Slack and Dropbox are used every single day by their business customers. And companies like Casper or Renoviso enable purchases that may not happen very often, but are products that you will interact with every single day in your home.
Third, we look for companies that we think are relevant to everyday people. This means something a little different depending on whether you are talking about consumer businesses or B2B products, but our belief is that the biggest and most impactful companies will need to be ones that redesign the lives of mass consumers or large populations of business users. It’s not surprising that the biggest ecommerce companies of the last few years — Wayfair, Chewy, Dollar Shave Club, and Jet — were all mass market focused businesses, not ones targeting niche or luxury consumers.
That said, we realize that the starting point for companies at the seed stage may be much narrower than a company’s ultimate ambitions. Tesla is the classic example, as the company started with a high-end roadster as the first step towards ubiquitous electric mobility. This is why more than a thesis or investment lens, we are founder-driven in our decisions and our purpose as a firm.
We’re Excited for What’s Next
We’re excited to continue partnering with founders transforming daily living for everyday people.
We will still strive to help founders by being high-conviction, hands-on investors that drive to decisions, lead rounds, and actively engage with our portfolio companies. And we invest across the spectrum of seed / pre-seed / post-seed rounds, for companies before they have meaningful traction, regardless of whether they are raising a few hundred thousand or several million dollars. Early-stage investing is still the only thing we do.
And we will continue to expand our platform of resources to help seed-stage startups on their audacious mission to redesign the Everyday Economy.
If you’re an entrepreneur on this sort of mission, please get in touch. We look forward to helping you build the future you want to live in.