Making City Living Better as an Investment Theme

Sometimes I find new investment themes proactively by trying to think about the world and where I see technology heading. In other cases, I realize that I’ve become interested in a theme by looking back at the companies I’ve met and find fascinating. I recently took a look back at a lot of the companies that I found really interesting, regardless of whether I invested or not, and tried to group them. It turns out that there is a large cluster in one theme – city living. While San Francisco is not as dense as New York or Tokyo, it does have sufficient density to unlock some really interesting businesses that maybe wouldn’t work as well in a more sparsely-populated area.

I think part of my interest in companies that make living in cities more interesting, convenient, or pleasant stems from my recent full-time move to San Francisco. Living and working in SF has given me a different view on what convenience means after living in Mountain View and Palo Alto for 14+ years. I can broadly lump my investment in things that make urban living better into a few large clusters:

• Transportation – In addition to the obvious breakouts such as Uber and Lyft, there are lots of other people tinkering at how both intra-city and inter-city transportation can be improved. This includes everything from companies that are doing interesting work in mass transit to those who are innovating on ride sharing. I’d put companies like Leap Transit, Corral, Ridepal, Scoot Networks, and others in this category.
• Logistics, Storage and Delivery – One area that I really appreciate as a city dweller is the investment in making logistics and delivery much easier. This is everything from making it easier to get on-demand delivery from services such as Postmates (disclosure: I am an investor) to services such as MakeSpace and Boxbee that make it easier to get access to storage for items that don’t fit in smaller apartments or living spaces. And then there is an emerging category of services such as Luna and Doorman that enable consumers to receive packages at night when they are actually at home.
• Food – There is no shortage of companies that are looking to build services that will deliver food to you, whether that food comes from a restaurant or is made in a commercial kitchen on behalf of a given service. This includes everything from Munchery to Sprig to SpoonRocket to many other emerging providers and established providers like GrubHub and Caviar.

I think I like companies in this category for three reasons. One, they can achieve meaningful scale by focusing energy and attention on a relatively small number of major metros that offer dense concentration of potential customers. Second, the secrets to what make these businesses successful is often non-obvious and rooted in the things you learn from operating a service at scale. This gives you a real edge in terms of defensibility when it comes to competing with new entrants. Last, a good number of these businesses either have strong network effects or are likely to lead to winner-take-all outcomes given the economies of scale you get from being a market leader. I’ll probably write more about that last point in another post.

If you’re working on a business that makes living in cities or urban areas more pleasant or interesting, I’d love to chat with you. Feel free to leave a comment below or send me your thoughts on Twitter @chudson.