4 startups reshaping the business landscape

By Guest Contributor
August 20, 2015
Sarah Pike

Sarah Pike

The following is a post written by Sarah Pike, a college instructor and Huffington Post blogger

We live in an age of continual disruption. Business models that thrived for decades have crumbled with incredible speed as new information technologies have enabled a wave of nimble startups. No industry is immune. For every New York Times, there’s a BuzzFeed; for every legacy taxi company, an Uber.

But while the major disrupters of the previous decade are well known—think Facebook, Google, and, more recently, Airbnb—new startups that promise to reshape even more legacy industries are forming every day. Here’s a snapshot of four with the biggest potential to change the way we do business.

Spring

Since the first iPhone was released in 2007, business analysts have been promising a mobile shopping revolution, with consumers foregoing retail stores and even desktop computers in favor of quick purchases via mobile devices. This hasn’t happened. While mobile purchases are growing in frequency, they still represent only a fraction of all ecommerce sales.

Spring is a new startup that hopes to make this long-promised revolution a reality. The company designed its smartphone app to relieve the many frustrations of mobile shopping. Users can browse more than 800 clothing and fashion accessory brands in a seamless interface designed specifically for the mobile shopping experience. Instead of entering contact details and credit card information with every new purchase, a consumer can buy an item with a single swipe.

The app comes on a wave of other startups attempting to improve upon the online shopping experience. With time, companies like Spring promise to change the way consumers shop—and how businesses sell.

Blue Apron

As the largest retail category in the United States, food and beverage is the Holy Grail of ecommerce. Countless startups have lived and died with the mission of cutting out grocery stores by offering food deliveries online. Despite their best efforts, online purchases still make up less than one percent of all food and beverage sales in the U.S.

With decreasing transit costs and improved technology, that may be about to change. Leading the charge of new online food retailers is Blue Apron. The company caters to consumers’ dual demands for quality food and convenience by offering custom recipes with pre-portioned ingredients delivered through the mail via an online subscription service. And investors are buying in. Launched in 2012, the New York-based company was recently valued at $2 billion.

Warby Parker

Some industries have long enjoyed large markups on relatively low-cost items. Shaving razors come to mind, as does designer clothing. Warby Parker is a new company out to disrupt one of the largest of these high-markup retail categories: prescription eyewear.

The company offers stylish lenses at a fraction of the price of traditional retailers. It does so by cutting out intermediaries and focusing on online sales, where there are fewer overhead costs to drive up prices. Improved transportation logistics means that it is now easier—and cheaper—to ship products back and forth through the mail. This gives the company the ability to offer home try-ons, previously one of the largest barriers to online eyewear sales.

Social Finance

Traditionally, banks have relied on the credit score to provide a universal assessment of a borrower’s ability to pay back debt. Social Finance, or SoFi, is a new San Francisco-based lender that aims to disrupt this traditional model. With Silicon Valley-style data analysis, the company uses different metrics to evaluate the credit-worthiness of buyers. It compiles a unique profile of each customer, weighing heavily on employment history and income and less on credit ratings. It appears to be working. Securities backed by the company’s student loans recently received a coveted AAA rating from DBRS Ltd.

While these startups serve different industries, they all rely on a similar business philosophy: Cut out intermediaries and go direct to consumers online, and profits will follow. Business owners would do well to watch how these companies work to stay nimble in the 21st-century economy.

Want to check out the financing and valuation histories for all four of these companies? Contact us today to set up a free trial of the PitchBook Platform.

Related content