I began my career as a technology investor where I studied and invested in hundreds of businesses in different industries across the world. My biggest takeaway from this experience was that almost all great companies had one thing in common - they were early and aggressive adopters of technology. Their counterparts – the companies that ignored technology – suffered the consequences regardless of their leadership position.
It explains why Amazon is worth more than 3x as much as Wal-Mart, Target, Best Buy and Barnes & Nobles combined; Netflix is worth $240 billion and Blockbuster is bankrupt; AirBnb is worth more than Marriott and Hilton; and technology companies represent eight of the ten largest companies in the US today. Technology is an opportunity for those that embrace it and a potentially lethal risk for those that don't.
During my time at TriMark, I discovered 3 important truths:
- Foodservice Equipment & Supply (FE&S) is a large and important industry (impacts the cost and quality of every outside the home dining experience).
- The industry is filled with dedicated and creative individuals who care deeply about the success of their restaurant and hospitality partners.
- There is very little high-quality technology for them to leverage.
NAFEM, the industry's largest trade association, lists only 6 technology companies in the industry (see here). These companies employ less than 70 total employees in the US. The vast majority work at AutoQuotes, which is now part of a global conglomerate focused on 10+ different industries. Importantly, most of its employees are in non-technology roles.
This is a major issue for the industry. If a FE&S company has a technology problem, who can they call that will take the time to listen and understand their problem, and then invest aggressively in 21st century technology to solve it?
This reality is forcing many FE&S companies to try to become pseudo-technology companies. This is challenging because great engineers are expensive and typically want to work at dedicated technology companies. This makes this endeavor -- building out a large, internal technology team -- both expensive and risky. Some have tried and done really well. Clark Associates is the big standout. Most of the industry though has sat on the sidelines making the tough decision to accept old technology instead of risking capital to try to build new technology on their own.
So how do we solve this problem? I'd argue by shining a spotlight on it's magnitude and real-world ramifications. As discussed, our industry is vital to everyday life. If there is one thing we've learned the last few years, it's the value of outside the home dining experiences. In a capitalist system, observed demand attracts more supply. The more we talk about the need for technologists, the more will show up.
That's one of many things I hope to accomplish with this newsletter.