In many ways it feels we’re edging closer to the futuristic realities portrayed in Back to the Future and The Jetsons. While flying cars are still a pipe dream, if not already a functional prototype in tech-forward cities like Dubai, some other tech advancements have very rapidly made their way into the mainstream and contributed to what have become some of the fastest-growing new industries.
Over the course of just a few months, a number of external factors have aligned to enable 3 fast-growing categories to take off, forcing their traditional competitors to brace for disruption.
Electric scooter sharing
We’ve come a long way from the infamous Segway failure in 2002, which sold only 30,000 units from launch through 2007. The massive oversight in consumer interest and ability to pay, combined with a market that wasn’t ready, led to the early player’s doom. Today’s sharing economy and booming metropolitan transit space, however, have paved the way for the success of “Boris bikes”, dockless cycles and now motorized scooter sharing, which are infiltrating a number of major metro areas in a hurry.
Technological developments and consumer interest in the product aren’t the only factors powering this explosion. Governments are investing heavily in e-scooters and shared bicycles, in an effort to fight air pollution and high traffic volumes in ever-growing urban areas.
From Lime, to Bird, to Skip, Scoot and Spin, startups in the e-scooter sharing market are getting significant attention from investors. In their first 12 months, Lime expanded into 70 markets, logged over 6M dockless rides, and is currently valued at $1.1B. Bird became the fastest startup to ever reach the $1B valuation mark and is currently valued at over $2B, and Spin has raised $125M in security tokens.
However, customer (and neighbor) satisfaction with these products is still questionable, as this rapidly growing new industry continues to iron out some of the more significant wrinkles. Lime came (literally) under fire recently when one of its models, containing a Lithium battery, exploded in the factory and they had to block users from accessing others in that model.
As well, multiple e-scooter rental companies are currently facing a class action lawsuit in a Los Angeles court regarding passengers who have been injured or killed, pedestrian issues and public nuisance claims. Overcrowded sidewalks, slow speeds and dangerous journeys are a few of the issues cited by the public.
These scooters are answering to a very specific niche in the urban mobility space, in which electric, docked and dockless bicycles also compete. Their ideal use case lies somewhere between longer distance journeys and distances short enough to walk, and their ideal locations are those cities that have been well-built for two-wheeled travel.
According to TechCrunch, one potential strategy for these startups – and a reason for their inflated valuations – is to use the flashy, frequent use scooters as an attention-grabbing ticket attracting people to the firm’s app, so they can land in a central spot on users’ home screens.
Index Venture’s Martin Mignot sees the short, under-3-mile travel time as the ideal gap for the scooters to fill. “If you look at how often do people use Uber or Lyft or Taxify… it’s going to be much less frequent than the scooter users,” he said. “And I think that’s what makes it such an interesting asset… The frequency will be much higher — and so the apps that power the scooters will tend to be on the homescreen. And kind of on top of the food chain, so to speak. So I think that’s what makes it super interesting.”
The idea is that nearly any transport option is going to come with an app, “opening up the possibility that a single app could house multiple mobility options and thus capture more overall value.”
Who’s paying attention? Uber. According to Recode, Uber’s early investment in Lime signals a potential future acquisition. With their incumbent logistical network, previous acquisition of Jump and upcoming infusion of cash via their pending IPO, Uber poses a significant threat, in a position to potentially quash this burgeoning sector if they decide to focus their efforts on the short-distance, individual urban transport space.
E-cigarettes
E-cigarette maker Juul recently became the fastest company to ever reach decacorn status. The brand is on a mission to combat adult smoking habits with what they claim is a healthier alternative.
Juul itself owns 70 percent of the e-cigarette market and is expected to bring in more than $1 billion in revenue, up from $454 million in 2017, according to a Wells Fargo analysis of Nielsen data, as reported by Inc.
Much like the e-scooter industry, however, Juul is also facing consumer backlash, FDA attention and negative sentiment.
Since launching the brand has come under fire for targeting a teen and youth audience who have spiked in vape use over the past year, in their “get vaporized” marketing campaign.
While the long-term impact of consistent vaping is still unknown, a report by the National Academy of Sciences, Engineering, and Medicine suggests that e-cigarettes are less harmful than traditional cigarettes. However, regulators are still coming down hard on Juul when it comes to underage use. According to Inc, In April 2018, the FDA demanded that “Juul Labs hand over internal documents regarding its marketing to determine whether Juul is intentionally appealing to minors.” At least three lawsuits have been filed as a result.
This hasn’t put a damper on the company’s upward trajectory, and the promise of the 38M smoker market in the US alone.
Augmented and Virtual Reality
Another fairly new addition in the tech space is the entrance of Augmented Reality and Virtual Reality products.
International Data Corp estimates that worldwide spending on AR and VR products and services will reach $27 billion in 2018, a 92 percent increase year over year. The majority of this spending will come from the consumer segment, which it estimates will reach $53 billion by 2022.
Commercial interest is also growing; a recent IDC survey of US IT decision-makers showed a large percentage of companies testing both technologies, and IDC expects that activity will only grow as major industry players roll out the next generation of AR and VR technologies throughout the rest of this year.
The number of companies working in the Augment Reality grew 50% since 2017 to 290. Investor The Virtual Reality Fund has evaluated over 4,000 in the VR space. Market leaders like Magic Leap, who have been working on bringing their product to market for years, continue to raise significant funding. From Snap’s glasses, to Intel’s Vaunt, we’re even getting close to wearables that resemble more realistic everyday objects.
Looking out
It’s not just direct competitors that need to look out at the rise of these explosive new industries. Those in traditional sectors, from tobacco, to automotive, to leading tech brands, need to monitor newcomers in the industry and remain aware of what’s coming next as disruptive technologies continue to quickly change the game.