The Opportunity of a Stale Business

Retooling Stale Businesses

There was a great conversion in the comments to yesterday’s post that I’d like to highlight. It was about retooling stale businesses and it was initiated by comment blogger JLM. A “comment blogger” is a person who leaves comments that can (and should be) entire blog posts, but they leave them on other people’s blogs. We’ve got a bunch of comment bloggers here at AVC and JLM is certainly one of the very best. Here’s what he had to say on the topic of retooling stale businesses:

There is a huge opportunity in America today to acquire “old school”, low tech businesses and retool them with modern management, modern marketing including social media, a well crafted financial structure and a dab of leadership to make an otherwise boring business into a highly scalable and expanding enterprise in which the growing size provides an enormous financial operating leverage.

In effect, this approach takes the cutting edge of the evolving technology (including the basic impatient thinking and genius of the entrepreneurs in that space) and cycles it backwards to apply it to other opportunities.

If you click on this link you’ll find the start of the discussion and you can follow it down the thread.

When my partner Brad and I were starting Union Square Ventures in 2003, we both read Carlotta Perez’ book called Technological Revolutions and Financial Capital. We were inspired by her description of the “second phase” of technological revolutions where the revolution is applied to the broad based business sector and society itself. An example from her book is the way the auto revolution allowed for fast food and malls to develop as big industries. They auto revolution reshaped the food and retail industries along with most other industries.

So when we wrote the business plan for Union Square Ventures, we consciously decided to focus on the “applications layer” (ie web services and now mobile web services) and not on the infrastructure layer which we saw as the largely played out “first phase” of the Internet technological revolution.

But as JLM so rightly points out, there is a much broader opportunity than the one Union Square Ventures is focused on. You can invest in existing but stale businesses and apply the lessons and benefits of the Internet technological revolution to them. But not only that, you can apply good old fashioned leadership to these businesses. This is not a new idea and I know of a bunch of entrepreneurs who have been doing this for a while now. But there is enormous opportunity here and I think we need to see even more of this kind of investment of time and money going forward.

Fred Wilson’s full blog can be found here. Bio: I am a VC. I have been for 19 years. I help people start and build technology companies. I do it in NYC, which isn’t the easiest place to build technolo ...read more

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