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June 25th, 2019

Plant Sales are Ripe for Disruption

Stock image sites with billion-dollar market caps, and a small business database that identifies P&L gaps.

Hey there gentle reader,  

Here’s a fun fact. Of The Hustle’s 30-ish employees, 5 are long-distance runners. And they’re all writers. Our editor ran an 18 minute 5k in his 40’s, another is training to run a 2:35 marathon, and another just signed up for a 50-mile ultra marathon in Italy. 

Speaking of running, we’ve just hired a new Trends writer. His name’s Mark Dent. You’ll get to know him and our other new analysts soon.

Now let’s get to it!

Last week’s recap (link): Most popular stories were on events businesses that are minting billions and an interview with a CEO who turned a nearly bankrupt company into a $400m-a-year operation. The third most-clicked item? A link to that CBD drink I finished off while writing the weekly email.

Today’s edition contains:

  1. Trends Report: Americans spent $48B on houseplants last year, and online sales are poised for record growth.
  2. Interview: Michael Acton Smith has built an $80m-a-year business catering to stressed-out consumers.
  3. Quick Takes: Where would you invest $1 million and how to blog your way to millions.


– Sam of The Hustle

PS: Last week’s open rate was unusually high due to a handful of subscribers who work in venture capital forwarding the email. One firm had 400 opens, another had 300, and another 200. We see you Chernin Group :). Contact our sales team for group access.

Would you recommend Trends to your friends? 


  • No chance

  • Meh

  • Very much

Trends Report

Online plant retail is a $700m+ industry that’s ripe for disruption


The online plant business is like the mattress industry of 2009: an overwhelming user experience, no clear winner, and a potentially massive market.

The Dirt: 1 in 3 American households bought a houseplant in 2016. The majority of sales were at brick-and-mortar stores. Hear how a handful of companies have made online inroads, with plenty more room for growth.

How big? Americans spent $48B at garden stores last year. Newcomers in the plant retail business are growing revenue as much as 5x annually.

Say it with me: The Casper of succulents. Millennials accounted for 83% of new plant enthusiasts in 2015.

In this week’s report, we look at the most popular plant niches and players in the space. Click the link and dig in.
Read the report →

Make a Mint

How to Blog Your Way to Millions

 
Content sites, blogs, news sites, whatever you want to call them, are simple to start. Pick the content you want to write about, set up a $50 WordPress site with $10/month hosting, and start writing. 


Turning your content into a viable business is not as easy. But when done correctly, businesses that are simple blogs can grow to be very large. Although the Buzzfeeds of the world, with their multi-billion dollar valuations and hundreds of millions in venture capital, are missing revenue targets, they still bring in hundreds of millions of dollars a year in revenue.

Additionally, many blogs have profitably scaled to incredibly large numbers with little starting capital.

  • NerdWallet: Credit card blog. Bootstrapped to $100m+ in revenue.
  • The Points Guy: A source tells us they passed $50m in revenue with only a few dozen employees.
  • The Penny Hoarder: Personal finance site. Bootstrapped to $37m in revenue, but facing hard times.
  • Wirecutter: Product review site bought by The New York Times for $30m.


Next week we’ll reveal a case study of a small-ish content site that recently sold for nearly $10m in cash. We’ll show you how the owner picked the niche and created the site.

But until then, we’re releasing his financials. You can find them here as well as discussion on the topic here.

 

Around the Web

 

“What essay or article have you read that has had a significant impact on how you think about business, markets, entrepreneurship?” (Twitter)
A great thread from the founder of CB Insights where people list their favorite business content. Favorites: Good Product Manager/Bad Product Manager by Ben Horowtiz and The Only Thing That Matters by Marc Andreessen (this changed my life too).

Bill Gates’ ‘greatest mistake’ (The Verge). Microsoft’s failure in mobile still bothers the Microsoft co-founder. “Android is the standard non-Apple phone platform. That was a natural thing for Microsoft to win,” he said. “There’s room for exactly one non-Apple operating system and what’s that worth? $400B that would be transferred from company G to company M.”

This has actually been a good year for tech IPOs (NYT). Uber and Lyft are standing out from the crowd for a new reason: Their struggles since the debut of their IPOs have made them a rarity among major tech companies this year. Dealogic tracked 25 tech companies that went public this year and found their stocks to be up 30% on average. 

Scooter damage (The Information). Investors are concerned about the sustainability of ultra-popular scooter companies Lime and Bird as they continue to have issues creating a durable product. Lime has received hundreds of millions in funding while promising fewer damaged and lost scooters. Municipalities continue to put pressure on the companies, too. On Friday, Nashville enacted a scooter ban shortly after a rider was killed.

Restaurants want to pay less for delivery services (WSJ). When restaurants first teamed up with separate delivery companies like GrubHub and Postmates, they feared missing out on new technology. Now that business is booming (up 13% from 2017 to 2018), restaurants like McDonald’s and Applebee’s want a bigger cut of the $34B delivery pie.

Obsessions

Where to Invest $1 Million

Bloomberg asked financiers where they’d invest $1m right now. Most said stocks and bonds. But there were a few surprises:

  • Da Hong Pao tea, a luxury gift in China that sells for $1m per kilo
  • Vintage Danish furniture that sells for $100k per item
  • E-sports (40% in gaming infrastructure like Discord, 60% in teams that are worth up to $300m)
  • Vintage toys (like Barbie), as baby boomers pay big for collectibles.

 

Storage Units & Stock Photo Sites

Zoom’s market cap is currently $22.9B. That’s more than 20x its revenue. Why are investors so bullish? Because the company has doubled its revenue while still earning a profit, something Wall Street clearly likes.

This got us thinking: What are some of the most profitable and fastest-growing businesses? Two that caught my eye: storage units and stock photo websites.

Wait a second…storage units?

Yes. In 2018 Public Storage made $1.7B in income on $2.7B of revenues, with one of the largest profit margins of any company. Interestingly, self-storage is a deeply fragmented industry with room for local consolidating, something we’ll get into later.


I ❤️Stock Image Sites

Specifically, Shutterstock. The 16-year-old company has grown revenue significantly while maintaining healthy margins.

 


The Opportunity

Stock image sites are big business. Getty’s another winner, making nearly $1B by charging brands like The Hustle $100k/year for licenses. However, there’s still room for niche offerings.

In the Trends Facebook group, a couple of stock photo site owners are discussing where they see opportunity. Join the conversion.

 

Trends Interview

Stress Is Big Business: How Michael Acton Smith Built Calm Into an $80m Company


We spent an hour with Michael Acton Smith to learn about his $80m-a-year business built on the back of a stressed-out society. 


Interesting takeaways: 

  • Before Calm, Smith scaled his last company to nearly $100m in revenue before he learned how quickly entertainment businesses can rise and fall. 

  • Subscriptions are more stable. Calm grew from $0 to $10,000,000 with only 9 employees. He explains how. 

  • The best entrepreneurs “spot these inflection points in society where public opinion shifts.” Acton discusses some of these shifts he’s seeing. 

Click below to read.

 

Read the interview →

New This Week

Do you run your own company? Are you interested in seeing how others in your industry stack up (i.e., time to launch, annual revenue, cost to operate)? We’re assembling a database of small businesses and would love your input.

If you have a few minutes, please fill out our survey here. Anonymized results will be shared with all participants.
Click Here for the Survey

Community Goodness

CBD must be the new bitcoin because you people love it. LOVE IT! Each week we get emails asking us to explore the CBD industry. Soon, but no case study today. But until then, since we’re so dedicated to giving the people what they want, we had two great CBD discussions this week.
  1. Recess, a CBD drink: Last email I wrote about how I was drinking a CBD drink called Recess while writing. One of you asked to get their CEO in the Facebook group and interview him. So we did. Read it here.

  2. JoJo, the CBD business owner: A Trends subscriber, Josey James Orr, owns a CBD payment processing business. It’s a great thread with over 60 comments. Read it here.

Would you recommend Trends to your friends? 


  • No chance

  • Meh

  • Absolutely
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