The Business Opportunity in Underutilized Assets

Two of the highly valued startups currently, Uber and AirBnB are platforms that turn highly underutilized assets into monetization opportunities for ‘sellers’. For example, take the case of Uber. Morgan Stanley estimates that cars are utilized to the tune of only 4%. With Uber, sellers (car owners) can turn their highly underutilized assets (cars) into income generating opportunities.

The Internet helps in the ‘discovery’ of these seller assets by buyers. So the internet ensures sellers can find a market for their underutilized assets. Since theoretically, any positive cash flow with these otherwise non-monetized assets is welcome for sellers, buyers too get a better price over other solutions. And the 2008 financial crisis played no small role in the success of Uber and AirBnB where sellers wanted new income and buyers wanted a better price. (To be noted that Uber was more than a better price. It was a better product for customers in a market that was protected for long and where supply was artificially constrained).

Let’s stay with cars and vehicles for a minute. Can there be any other way this highly underutilized asset – the car, can be monetized?

Wrapify is a startup that turns cars into moving ads. The startup offers a two-sided platform between drivers/car owners and advertisers. The drivers can sign up and if they meet a set of minimum requirements, Wrapify will ‘wrap’ their car into ads like shown below.

23 Wrapify

Image Source: click here

Wrapify then using its algorithms calculates the amount of ‘impressions’ the advertiser got from the car moving around (for example higher the traffic, higher the impressions and hence higher the payout). The timing might be great at a time when wages are still stagnant and more and more drivers are complaining about Uber. Maybe a Uber+Wrapify will put more money into the pockets of drivers.

Veniam is another example. It incredibly turns the ‘underutilized asset’ of public transport into something remarkable. Co-founded by the founder of Zipcar, the startup claims to develop the networking fabric for ‘Internet of Moving Things’. The ambitious startup attempts to blanket entire cities in seamless Wi-Fi. Basically, the engineers tap into a city’s existing internet infrastructure and at many points place wireless routers. Then a fleet of public transportation – buses, garbage trucks, police cars and the like are fitted with Veniam’s NetRider routers which receive wireless signals from access points, creating hotspots on the move. It creates a mesh network that covers the entire city and the public needs one login and no hot-spot hopping.

Skills, Knowledge and Time are a commonly underutilized asset. Take a paper and jot down your top 3 skills. And how many of these skills do you use at your day job? The unused skills are underutilized and are potentially possible to monetize. Again the internet makes it easy for ‘discovery’ of people with different sets of skills and ‘discovery’ of demand for these skills. Many businesses and organizations have already been founded on this premise.

Quora unlocks the knowledge residing in individuals. Wikipedia survives on the knowledge of its volunteers. Innocentive, a platform that connects problem solvers with organizations is a typical example. Innocentive in 2007 sought solutions to help clean up remaining oil from the 1989 Exxon Valdez Disaster. A solver named John Davis successfully solved it and was awarded the prize of $20,000. The kicker? He didn’t have any background in the Oil Industry. He was working in the concrete industry. Players on FoldIt solved a scientific problem of deciphering the crystal structure of Mason-Pfizer monkey virus, an AIDS causing virus that was unsolved for 15 years. How long did these players take? 10 days! Are you working at some day job but you have a knack for advertising and can think up good ideas for advertisements? Then Tongal is the place for you. Top brands like Frito-Lay, Hasbro, Colgate, Gillette, Pantene post challenges on the platform for new creative ideas for advertisements. You can submit short ideas, pitches and even videos (they are in a staged process) and earn money for each stage if your ideas are selected. Kaggle is another interesting platform hosting challenges for Data Scientists. The company boasts more than 400,000 data scientists on its platform and has clients including GE, Mastercard, Amazon, Merck and Facebook.

There are still lots of skills that can be unlocked for different purposes.

  • If you have knowledge in law, can you be connected to someone who is ignorant about it but needs to get justice?
  • Lots of women in India cook food day in and day out for their families. And they are paid nothing for it. Can that be monetized by connecting them with willing buyers who want home cooked food?
  • Can people working in well paid jobs but looking for more meaning in life be connected to non-profits who would value your level of expertise on something but cannot afford to pay?

There is a flip side to the story though. People with skills that are available abundantly in the population may have a negative impact as their wages are driven down by technology. The great economist Ronald Coase in 1937 wrote an influential article called the ‘The Nature of the Firm’ where he focused on a simple question – why does a firm exist? His answer was ‘transaction costs’. If you are always contracting out every piece of your work, you have to search, evaluate and pay for every job that ends up costing more than hiring somebody full time. So companies hire full time. Enter the internet. The internet makes the ‘search’, i.e. finding employees easy. So for skills abundantly available, it becomes easier and easier to contract out. A study finds that in the United States, around 53 million people freelance which is a huge percentage of the population (35% of the workforce). It is difficult to make the case that their underutilized time is being ‘monetized’ in all cases.

Capital is another asset that may be underutilized. Bain Capital published an important research in 2012 titled ‘A world awash with money’. Here’s what they had to say about it.

“Our analysis leads us to conclude that for the balance of the decade, markets will generally continue to grapple with an environment of capital superabundance. Even with moderating financial growth in developed markets, the fundamental forces that inflated the global balance sheet since the 1980s—financial innovation, high-speed computing and reliance on leverage—are still in place. Moreover, as financial markets in China, India and other emerging economies continue to develop their own financial sectors, total global capital will expand by half again, to an estimated $900 trillion (from $600 billion in 2012) by 2020. More than any other factor on the horizon, the self-generating momentum for capital to expand—and the sheer size the financial sector has attained—will influence the shape and tempo of global economic growth going forward.”

“… Businesses and investors will struggle to find a sufficient supply of attractive, productive assets to absorb the amount of financial capital they have to invest, driving up asset prices and forcing them to lower their expectations for high rates of return on investments.”

In the era of low interest rates, can a new platform help divert capital to important and/or high return activity? Can some of this capital efficiently be diverted to high impact philanthropy or say social innovations?

According to me, Information is another asset that is heavily underutilized. Google and Facebook are some of the most valuable businesses because of the ‘information’ that can be unlocked in different ways. But new billion dollar companies will be built around underutilized information. This is primarily because of the development and advances in Machine Learning. Machine Learning to put in a simple way is used to find patterns in large amounts of data and give computers the ability to learn without being explicitly programmed. Kevin Kelly of Wired writes,

“In fact, the business plans of the next 10,000 startups are easy to forecast: Take X and add AI. This is a big deal, and not it’s here.”

Hyperbole or not, huge amounts of value will be unlocked from different types of data. It may disrupt many industries, especially professional services like Consulting and Finance in the process.

A startup Orbital Insight turns the ever improving Satellite images into valuable information for retailers, hedge funds and real estate companies. The startup uses its machine learning algorithms along with the power of hundreds of computers running on the cloud on millions of images to come up with interesting insights. The startup correctly predicted that Home Depot was going to have a blow-out quarter by looking at car counts during the past five years (the counting and analysis was automated of course).

14 Orbital Insights

Cognitive Logic helps organizations to pool data to get new insights without being anxious about privacy. In this case, ‘un-pooled’ data is an asset that is far less utilized.

Waldo Photos is attempting to build one of the very interesting business models I’ve seen in the recent times. It is a two-sided platform that connects customers with professional photographers. Sounds banal? Here’s the catch. All you need to do is take a selfie. And Waldo Photos will find your photos wherever they are in whichever professional photographer’s pockets. For example, say you go to a basketball game. And professional photographers capture multiple shots of the crowd. Waldo makes sure you find a picture you are in if it was taken by a photographer who have signed up as well. (Here the photographs with the photographers are the underutilized assets). Building a marketplace around it with image recognition is indeed an interesting idea.

Here are some more examples of underutilized information:

  • There is lots of value in the countless blogs, articles and journals lying around the internet underutilized. Can machine learning unlock its value and can you build a business model that disrupts consulting?
  • Can the crumbs left online by an individual like tweets, blog posts, Github submissions, Quora answers etc. be used to assess their skill and talent and can that disrupt recruiting?
  • Can lots of value be unlocked in electronic health records and digitized medical records?
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