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August 6th, 2019

Meat substitutes are heating up

On the future of smart phones, and the many uses of private security…
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What’s new this week:

  1. Meat substitutes: Impossible Foods and Beyond Meat get most of the headlines, but big opportunities exist in lifestyle marketing and plant-based dairy.

  2. Augmented reality: Google Glass and others may have flopped, but wearable AR has practical uses for dozens of industries, with many outdoing the smart phone. The market is expected to expand to $161B in 2022, from $4B in 2016.

  3. Impossible’s Pat Brown: With Burger King debuting its Impossible Whopper nationwide this week, we reached into the archive of Hustle Con talks to share startup lessons from Impossible Foods founder Pat Brown.

If you missed last week’s email, it’s available here. Our most popular stories: A deep dive on the billion-dollar business of live streaming and an interview with a co-founder of Unsplash, a fast-growing stock-photo site.

Now let’s get to it!

-Mark of The Hustle

Meat image

1. Market for meat substitutes heats up

How much caché does plant-based meat hold with consumers these days? After debuting the Impossible Whopper, Burger King’s average foot traffic increased by an average 18.5%. So starting this week, the meatless Whopper will be available in its more than 7k US locations.

Veggie burgers have been around for nearly a century…

So, what’s changed?

  1. The consumers: 25% of Americans between the ages of 25 and 34 now identify as vegan or vegetarian. As a result, US vegan food sales in the first six months of 2018 grew 10x faster than other food verticals to reach $3.1B last year.

  1. The investment: 228 unique investors have poured over $17B into plant-based startups since 2009. Beyond Meat’s record-breaking May IPO put its valuation just shy of a sizzling $4B.

Which came first, the money or the customers? The world may never know. What we do know is that they’ve combined to form a veritable plant-based meat tornado, sweeping up every VC dollar in its path.

How to get in on the action:

  • Marketing consulting: Big food companies and legacy health food brands are playing catch up. Lifestyle marketers who gain a foothold in this niche are poised to make it big.

  • Plant-based dairy: Vegan cheese is still nothing like the real thing––and it’s still way too expensive. Put some R&D elbow grease behind it and beat Big Cheese to the punch.

Read more here

2. The augmented reality business is set to 40x. We look at where the opportunities are. 

Our obsession with augmented reality smart glasses began with a guided tour of Mount Vernon, George Washington’s 262-year-old home in northern Virginia.

On the tour, a life-sized Washington walks and talks about his life in the meadows around his mansion. It’s as if you’ve been transported back to 1757.

That’s just one of the many applications driving the $100B AR business––which Apple CEO Tim Cook refers to as the “future of the iPhone.”

Entrepreneurs have discovered a variety of other uses, helping consumers:

  • navigate their way around cities

  • visualize large purchases for their homes

  • and view museums or sports events in new ways

Companies like Microsoft and Walmart have recently made big wearable AR investments. Startups have found ways in as well, teaching businesses how to use wearable AR as they adopt the new technology.

Click here to read

3. News you need to know

The race to change A/C (Quartz): Air conditioning works, but it needs to be disrupted for another reason: its climate footprint. Some 12% of non-carbon dioxide emissions come from air conditioning and refrigerating units. By 2050, an expected 1.5B new A/C units will be added around the world. Whoever comes up with an air conditioning unit that uses less energy and emits fewer chemicals stands to capitalize. India is already hosting a competition for A/C innovation with a $3m prize.  

Battling Amazon at logistics (Tech Crunch): Yes, Amazon is a power, and about half of US households are Prime members. But what about other retailers? They need to compete by having logistics and shipping comparable to Amazon. VC Simon Wu suggests opportunities abound for companies that can innovate in categories like storage, speed of delivery, warehouse management, and visibility across the logistics chain.      

Middle-of-nowhere vacations (WSJ): The world’s wealthiest travelers want to escape technology and other tourists. So they’re springing for off-the-grid locations as part of a new trend that’s like glamping on steroids. One internet-free home in Alaska’s Denali National Park charges $3k per person per night. A vacation home in the Oregon wilderness has a 300-person wait list. Build lodging in a remote, picturesque destination and start an off-grid tourism site. 

Billionaire Mark Cuban on 3 pitfalls entrepreneurs must avoid (Entrepreneur):

  1. Don’t build a feature: Similar to Andrew Wilkinson, who we featured last month, Cuban insists you must create a product––something that solves a problem and that people want to buy.  

  2. Don’t get excited by a competitor: Some business owners think competition means their business idea is validated; Cuban says it just means you now have somebody to outsmart.

  3. Don’t swoon over star employees: Cuban says it’s more important to build a strong team than to overinvest in one person, who could leave the company.

4. Private security business expected to reach $145B

Security guards outnumber police officers in the US nearly 2-to-1 and are expected to grow, even as police departments struggle with recruiting. According to industry research firm The Freedonia Group, revenue for the US security guard industry are worth about $60B and have increased at a 4% clip. The global market, especially because of China and India, is expected to expand 6% annually in the coming years, to $145B. 

Though the proliferation of events and festivals has been a boon for security companies, the increased demand also stems from major issues afflicting the United States and the world, including:  

  • Income inequality: According to The Freedonia Group, wealth disparities have increased concerns about crime and given wealthy people the disposable income to hire private security services.

Five major security companies own about half the market, but smaller firms have risen up. We talked with Laura Vodvarka, VP of innovation at Signal 88 Security. Since 2007, Signal 88 has grown from its lone Omaha base location to having 120 franchisees in 38 states, as well as Canada and Australia. The company made about $84m in revenue last year and hopes to make $100m this year. In 2009, its revenue was $1m. 

Signal 88 has separated from traditional competitors in a few ways.  

  • A focus on apartments: The apartment industry is Signal 88’s niche. With younger people buying homes later––or not at all––and apartments getting built and filled at astonishing rates, Signal 88 expects apartment security needs to continue increasing.  

  • Roving patrol: Signal 88 was one of the first companies to introduce a “timeshare” aspect to security, Vodvarka says. Rather than station a guard at one location for an entire night, Signal 88 security guards move to dozens of different locations, working for clients who hire them on a part-time basis.

  • A friendlier look: Signal 88 guards don’t look like police officers. “A lot of our competition tries to do that and has the tough look to them,” Vodvarka says. “We want to be approachable and customer-service oriented.”

5. Reimagining small hotels for millennials

There are more than 50k hotels in this country, according to the American Hotel & Lodging Association. And nearly one-third are unaffiliated with a chain.

Many of those hotels are desperate for a makeover, and facing increasing competition from Airbnb, Marriott, and other big players.

But many small hotel owners don’t have the capital to upgrade their facilities or improve their use of technology.

Marwan Roushdy sees a big opportunity for a “millennial motel makeover.” Roushdy, a former Uber product manager, thinks independent hotels could increase their revenue by as much as 50% by:

  • increasing operational efficiencies

  • improving negotiating power against online booking networks

  • upgrading the look of rooms to appeal to young people

His idea: Build a new nationwide hotel brand that joins together many of those unaffiliated hotels, providing them with cash advances to improve their facilities and technologies. The investor group would take a share of the increased profits the hotels generate––which could be $500k or more per year.

For a more detailed look at Roushdy’s idea, check out this deck. (Our favorite part is the last three slides, where he breaks down the numbers.) 

6. Impossible Foods CEO describes his vision for a meatless future

Grab yourself a juicy Impossible Whopper and sit down for this week’s deep dive with Pat Brown, founder and CEO of Impossible Foods. Instead of our normal Q&A, we’re bringing you highlights from a speech Brown gave at our 2018 Hustle Con.

Among the takeaways:

  • Brown shares his “rookie” pitch deck that led to the first investments in his company

  • He tells how he blew half his startup funding on a “ridiculous” investment in soybean roots

  • He describes how his early pivots led to far bigger market opportunities

  • And he explains how he plans to take on the $1.5 trillion meat and dairy industry

Read more here

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