I was having a conversation with a founder last week about boring companies. (No, not that Boring Company). Specifically, how important it is for today’s entrepreneur to not overlook opportunities in the mundane aspects of daily life.
There will always be something new and shiny to chase. Web3 is still hot, and industries that were cool a decade ago are making a roaring comeback (looking at you, startups in fintech).
It’s never been easier to get caught in FOMO. For every startup idea that’s boring, a hundred others are catching the eye of VC’s and media. No wonder so many startups pivoted to web3/blockchain technology in 2020 and 2021 (no comment on the amount of startups that pivoted away from web3 when the markets tanked).
I get it. It makes sense to be working in an industry everyone is talking about… doesn’t it? But when you zoom out and look at the everyday life of everyday people, a stark reality materializes: the businesses that help us enjoy daily life are boring businesses.
Gas stations so you can commute. Cleaning supplies so you can maintain a happy home. Landscaping and gardening services so you can win “yard of the month.” Fiber and communication lines so you can stream more than you ever have before. Sanitation services so you won’t live in filth. Storage facilities so you can store those holiday decorations. And on and on.
It’s nearly impossible to live an American life without touching these businesses. They’re incredible opportunities usually with a huge TAM, recession-resistant services, and low barriers to entry.
Why then, are so many founders unwilling to enter these markets?
Some of the reason might be FOMO/wanting to be on the cutting edge of technology. (Building “the future of Internet” is a lot sexier than streamlining transportation logistics.) Perhaps the fact that boring businesses lack venture scale is another reason. (It’s unlikely your gardening company is going to be the next unicorn.) Or maybe it’s because boring business opportunities are “out of sight, out of mind”? (When was the last time you thought about soil infiltration testing when you passed a new housing development?)
I believe there is no better time than right now to build a boring business, and solve boring problems. Consumer sentiment, market demand, and the emergence of new technology have created a perfect storm for these opportunities: just this week, I spoke to a startup who is working to revolutionize healthcare payments. Healthcare payments. It doesn’t get more “boring” than that, yet the opportunity is unlimited.
If you’re a founder looking for something real that has a sustainable, tangible impact, consider starting a boring business.
Boring businesses have a massive TAM.
Huge markets aren’t just in SAAS and aren’t just new opportunities like web3: they’re everywhere. (Many of these opportunities are stuck in markets coined as “already won” by incumbent businesses.)
Surprise, surprise: a market appearing to be “won” doesn’t mean there won’t be room for your venture.
Just take a look at the Figma acquisition by Adobe. Many people said that design tooling was a market already won by Adobe. Yet Figma still managed to carve out a massive chunk of that market, craft tools that are used by millions of teams, and get acquired for $20B—one of the largest private acquisitions in history.
So let’s use a common boring business as an example: self-storage. The USA self storage market isn’t one to laugh at: it’s $50B+ with CAGR 5%+ and plenty of room for growth. According to the US Census Bureau, construction spending on self-storage has increased by 584% from January 2015 to January 2020, and the industry is seeing a huge boost from COVID as e-commerce brands are opting for inventory storage space, no longer needing brick-and-mortar storefronts.
Self-storage is a perfect boring business because the consumer already understands the product, need, and offerings. Antiquated incumbent brands are still running the show (which provides a wedge for a forward-thinking entrepreneur to shake things up), and self-storage is widely used across socioeconomic classes: those with lesser means and those with plentiful means still use various forms of storage services.
Why does this matter? It’s incredibly difficult to establish a new market worth billions—often taking decades. Always looking to “define a new market” keeps huge amounts of opportunity off the table.
(And it's not just self-storage. This story plays out again and again in other markets—huge TAM, tons of opportunity to build value in your venture, plenty of room for growth.) ¹
Boring businesses offer accessible wedges for entry.
Back to our self-storage example. With boring businesses, just doing things in a more modern way can create incredible value. CubeSmart, for example, became one of the largest players in the self-storage industry (market cap of $9.73B) by offering a simple value proposition: they allowed customers to manage their storage unit on an app and through online services.
That’s right. What you and I have been doing for over a decade—managing things online and through apps—CubeSmart used as a value proposition to build a multi-billion-dollar empire in an industry where meeting in person was the norm.
Of course they’ve done other things correctly as well: healthy balance sheets and prioritizing high-quality customer experiences, just to name two. But their edge came from their modern approach: surrounded by a “this is how things have always been done” mentality, CubeSmart was bold enough to shake things up. Now they’re getting rewarded for it.
How valuable would it be to you as a consumer if you could access your medical records from anywhere in the world and share them confidentially? What about never needing a REALTOR® to buy a house again? (Consumer-friendly app-based transactions are something I’ll talk more about in the future.)
You get my point.
Simple, modern solutions in antiquated industries bring huge returns.
It’s not lost on me that actually doing these things isn’t easy—the only “easy” way to make money would be if you’d bought $1M worth of Bitcoin in 2013. But the solutions are often straightforward: doing something well, aided with the use of technology, in an industry that’s trailing behind consumer expectations, is the gameplay for winning in your boring business.
Boring businesses are recession-resistant.
Notice I said “recession-resistant” and not “recession-proof.” If 2020 and 2022 have proved anything, it’s that no industry is fully recession-proof. Even still, boring businesses fluctuate less than others.
As an example, many of the exciting web3 startups that were all the rage in 2020 and 2021 have quietly been moving into other domains. @GergelyOrosz says it well:
The issue with businesses that rely on people having free money to spend, is that they die when consumers run out of extra income.
By contrast, there is nearly a $100B market in the USA for waste disposal services with CAGR over 6%. Waste disposal isn’t going anywhere (and people still pay for those services when markets are down).
Again, the labor isn’t sexy—waste disposal jobs quite literally dominate the list of dirty jobs from the TV show, *Dirty Jobs—*but it is profitable (and profitable ventures are sexy by default).
What does this mean for you?
Am I saying that you need to drop everything and go pick up a garbage can?
No, not at all.
What I am saying is not to overlook the opportunity of building a massive business in industries that are considered outdated, unsexy, and boring.
Next time you get in your car, notice the trillions of dollars that exist around you in ventures you hadn’t recognized before... perhaps bringing a modern approach to one of these ordinary industries is your next move?
One thing is certain: the opportunity of boring businesses will be “missed by most people because [they’re] dressed in overalls and [look like] work.”
¹ See also: the $43B transportation logistics market or the $105B landscaping services market.