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October 8th, 2019

💵 500+ successful startups 💰

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We find big returns in “unplugged” vacation homes and explore why the best investments are often timeless.

Happy Trends Tuesday! Welcome to all of our new members… Did you know you could see an archive of our weekly emails here? Betcha can’t guess our 3 most-clicked pieces. Here’s a hint:   (answers at the bottom).

New this week: There’s big money in “unplugged” vacation homes. We show you where to buy one for $40k and make your money back in 18 months… Here’s something we 🤟: Starter Story, interviews with 100s of successful startups. We tracked down founder Pat Walls to see how he built it… Also: how to use the “Lindy Effect” to start a timely business… how to raise investment money outside New York and SF… the next frontier for sports tech… and more.

Ready to hustle?

01  Signals
Quick snapshots from across the internet of potential trends before they happen.
Decafino graph

Decafino
This brand new Seattle startup has created a decaf pouch, similar to a tea bag, that removes caffeine from any cup of coffee while keeping the taste. Its referring domains are bolting upward.

What’s next: Health-conscious millennials who want to calm down from daily pressures may decide to cut back on caffeine, just as they have with alcohol. A craft decaf coffee company in Britain, Decadent Decaf, has experienced 100% growth rates and made £250k last year

Miniature Cooking Set graph

Miniature Cooking Set
Honey, I shrunk the kitchen. A niche trend of miniature cooking has been gaining traction through social media, where people are making entire meals the size of a thumb. YouTubers like Miniature Cusina currently sport 1.5m subscribers, while Instagram accounts like tinykitchentm have 2.2m followers. 

What’s next: People love tiny things. There’s opportunity to get in on the mini-cooking trend or to dream up the next miniature product wave. From tiny construction supplies to tiny art materials, people are buying these bite-sized products.

Pilates Reformer graph

Pilates Reformer
People want new workout options, and the pilates reformer has gotten attention. Invented by the pilates founder, the machine is equipped with a moving carriage, attached by a set of springs, which allow for a wide range of exercises geared at building strength and flexibility. 

What’s next: People can purchase these machines for a few hundred dollars. Perhaps more compelling, gyms are selling classes at double the price of non-reformer classes.

See the archive of our Signals here and browse through dozens more Signals related to Inc.’s 5000 fastest-growing companies here.

02   Trends Recommends

Startup advice:

  • A psychologist’s guide to turning customers into evangelists (Inc.): Be very positive. 

  • Tips for raising money outside SF and NYC (2048 Ventures): You must prove why your city works best for your company.

Opportunities:

  • The next frontier for sports tech (TechCrunch): Investors are bullish on data-tracking devices for athletes.

  • Get big-time funding in India (The Information): For Chinese investors, the new China is India. They invested $6B in 2018, compared to $600m in 2016. 

🖋️ Take note:

  • Record holiday sales are coming (Salesforce): Salesforce estimates $136B in US online sales, with a huge chunk of shoppers being inspired by Instagram. 

Must reads:

  • The billionaire who bought his kids into every college (ProPublica): How’s this for managing risk? Hedge funder David E. Shaw donated millions to several elite universities to ensure his children’s admission. 

03   Vacations, unplugged 

Some 60% of employees check email on vacation. That number increases to 93% for employees making between $180k and $200k. 

The latest hotspot: Tourists are flocking to remote areas in nature—with poor cell service and no WiFi—that force them to unwind. Some established locations, like the Chalet in Denali National Park, command upwards of $1k per night. 

The opportunities:

Follow the Getaway model: Getaway has earned ~$40m in funding since 2015. It operates nearly 200 tiny cabins in forested areas outside 8 US cities. The cabins are equipped with modern accoutrements, except for WiFi. And visitors are encouraged to lock up their cell phones in a safe. 

The cost of one cabin is ~$40k. At an average cost of $150 a night and occupancy 200 nights a year, you’d make $30k annually. 

Airbnb provides an easy platform for new entrants. Oregon’s well-known Summit Prairie house, which is sold out through the year, still uses Airbnb.   

Build near underappreciated national parks: Yellowstone, Yosemite et al. are too crowded. But there are dozens of lesser-known national parks, from Big Bend in Texas to Pictured Rocks in Michigan that have seen 30%+ growth rates since 2014.

Read the full report.

04   The Lindy Effect

Ever heard of the Lindy Effect? It can help you decide whether a business idea has staying power.  

Showbiz origins: Writer Adam Goldberg made an odd observation about the fame of comedians in the 1960s. He called it “Lindy’s Law” because entertainers used to hang out at a New York City deli called Lindy’s.

  • But the theory was given credence in the 1980s by statistician Benoit Mandelbrot. He theorized that future success is proportional to the past. 

  • So if an actress has 10 years of successful starring roles, one could assume her reputation as a star would last another 10 years. Each additional year of relevance implies an additional year of staying power. Mandelbrot renamed it the “Lindy Effect.”   

How this applies to business: Although new ideas and trends pop up with regularity, the Lindy Effect assumes time-tested ideas make sensible bets for entrepreneurs. I heard about the Lindy Effect from a talk given by Jon Staff, whose company Getaway was featured in our story about unplugged vacations. He started his company because he knew humans have craved nature and leisure for centuries and likely will for centuries more. 

  • “We actually don’t think that much about what’s new. We think about what’s old,” Staff once said in a speech. “We think about the Lindy Effect and think back to what was loved 10 years ago or 20 years ago or 100 years ago.”  

Critical thinking: This doesn’t mean you should go full throwback. It’s about modernizing and innovating time-tested ideas. 

Want more? Watch a video on applying the Lindy Effect to investing. 

05   Speaking of business ideas

Where do you get inspiration to think about new businesses? Our CEO Sam Parr started a thread on Facebook asking that question. Here are some of the top responses:

  • Craigslist: Find a category “where there’s a lot of action, people sell the same stuff over and over again. Make that experience better.” — Sam 

  • Procter & Gamble spinoffs: “There are 4-5 companies that own most consumer goods we buy. They don’t innovate much and suck at direct to consumer marketing. Find out which products have a combo of the biggest margins, most repeat purchases, and market size.” — Sam

  • Annoying parts of life: “Everyday life frustrations. Then how to solve that.” — Monique Mollere 
  • Nuggets in testimonial videos: “Watching ‘testimonial videos/success stories’ while doing research on different business software.” — Mycah Kreft

06   An interview with Pat Walls, the man who’s interviewed over 500 founders 

Since 2017, Pat Walls has been getting the inside scoop on how people start companies. On his website Starter Story, he has asked more than 500 founders for the secrets to their success.

Among his most interesting finds: A company that makes swim trunks from trash and a portable treehouse business. 

We asked Walls how he started his business and the major characteristics he’s noticed in successful companies. 

3 takeaways: 

  • Build sustainable businesses that won’t disappear with fads. 

  • Free up your time as a founder so that you can focus on the bigger things that will really drive your business forward. 

  • Paid advertising is getting saturated. The businesses doing really well have built up a brand, owned their marketing, and aren’t competing solely on price. 

Read the full Q&A.

07     Answers to quiz

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