By Alex Hawkinson, BrightAI
Unicorns are sexy. Laundromats? Not so much. But I see promise where others just see suds.
What if you were to turbocharge laundromats with high-tech makeovers? Suddenly, instead of struggling to generate modest income, laundromats could be awash in revenue, powering their owners and investors to unthinkably rewarding returns.
This isn’t just a theory. My partners and I are on a mission to imbue traditional companies and industries with “AIoT” – a hybrid of AI (artificial intelligence) and IoT (the Internet of Things). And in our first proof of concept, we’ve reinvigorated a 90-year-old national laundry-solutions giant. As we suspected, the spectacular results show how AIoT can unlock the potential in unassuming, solid performers like laundromats – as well as residential HVACs, pest-control and community infrastructure.
These are among the investment world’s hidden gems. Rather than desperately searching for the next elusive unicorn, we’re convinced that PE fund managers might instead have better luck finding billion-dollar returns in the “unsexy” holdings already sitting in their portfolios.
Take your competition to the cleaners
The spark for this idea was rooted in a costly disaster. Our family cabin was nearly destroyed by flooding when its pipes burst – and we didn’t learn about it until months later. But what if that cabin had been a “smart home,” which could alert its owners to situations that require immediate attention before turning into catastrophes?
That led me to found my previous company, SmartThings, the vision of which was to make every home a smart home. Shortly after its founding, SmartThings became the largest IoT platform in the world, connecting to 1 billion devices across 88 countries (and we eventually sold it to Samsung).
In my new venture, I’m teaming up with partners who are responsible for some of the most iconic consumer successes in artificial intelligence — including Amazon’s Alexa and Prime Music. Our combined AI and IoT pedigrees led us to another epiphany: if we joined forces, could we make every business a smart business?
The answer to that question is a resounding yes. AIoT is, in fact, growing revenues in ways – and places – that even we never would have imagined just a few years ago. And for investors, through AIoT, it’s becoming possible to disrupt – even revolutionize – traditional industries, and create a winner-take-all market.
Our first proving ground, that 90-year-old laundry giant with over one million laundry machines in service in more than 4,500 laundromats, 6,700 hotels, and 127,000 multi-housing communities, is a case in point.
What we’ve discovered so far is that AIoT has put the once physical-only business on a path of almost doubling free cash flow out of the business – without requiring any new customers. That’s revenue that was solely derived from the latent value in the business that they (and most everyone else) didn’t even realize was there.
It’s like finding coins under the couch cushions. Except that, in this case, it’s gazillions of coins.
Billions in those bubbles
One reason for the increase in revenue is that customers use the service more now, because it’s a better experience. Patrons can use an app to see if there is an available machine before they make the trip. Or they can see in advance when their laundry is ready. Or they can even pay with their phones.
Not only is it better for the company and their investors, and the end users, but it’s also a win for the employees and management. Now the dispatchers who are assigning drivers to visit the company’s 200,000 laundry rooms can be more efficient in their assignments – no more trips to a remote location to pick up just a few quarters. And managers can better allocate machines to more frequented locations. Or collect data on consumer usage (example: is one locale underutilized on Tuesday nights?) and respond accordingly with new and innovative ideas.
At the end of the day, this laundry solutions provider is an essential consumer-services platform reaching 50 million consumers with something they need, every single week. But now suddenly, with AIoT, we’ve catalyzed profits at an enterprise-value level — more than a billion dollars in incremental value in the course of just one year.
AIoT can unlock this potential in vertical after vertical – that’s the power of this platform. And it goes to show for PE managers that hidden gems are everywhere … if you know where to look.
Alex Hawkinson, is co-founder of BrightAI, which transforms business results by digitizing clients’ physical environments, making them intelligent and controllable.