Stories

Here’s some food for thought

For the first time in history, the world’s population is more urban than rural. As cities get bigger, everything starts accelerating. Cities are truly one of the most important inventions in human history.

Facts

  • The U.S. is re-urbanizing. Urban population growth is outpacing suburban and rural growth for the first time since WWII.
  • Cities are more productive. Every time a city doubles in size, its population becomes 15% more productive.
  • Cities are better for the environment. The suburbs may look greener but a person living in NYC emits 14,000 fewer pounds of carbon dioxide per year than a person living in a suburb.

Insights

  • Urbanization is expected to continue for the foreseeable future.
  • The physical design of suburbs doesn’t suit downsizing baby boomers or millennials who are driving less, renting more and staying single longer.
  • The transition back to city centers has implications for consumer spending habits. For example, people in cities spend 40% more on food outside the home than those living in rural areas.
  • Cities are spawning new knowledge and service based businesses that are only viable with denser populations.

Action

  • To capitalize on these trends, we invested in the largest online and mobile food ordering platform in the U.S.
  • For the diner, this company offers a convenient and accurate way to order food. For the local restaurant, it increases online exposure, reduces labor costs and boosts sales.
  • This strong two-sided market dynamic produces a “network effect.” More diners enhance the value proposition for restaurants and more restaurants on the site enhance the value proposition for diners.
  • This company has a first mover advantage, commanding 90% market share in NYC, and is already ten times larger than its closest competitor.

The company’s strength in the marketplace creates a self-reinforcing process that is defensible and makes it difficult for new competitors to gain a foothold.

July 2015