A thought crossed my mind the other day as I was contemplating investing in a software-leveraged trash hauling company. Pardon me, waste disposal company.
Okay, you can stop laughing now!
I’m an active broad-spectrum angel investor and invest in a lot of areas, most of which are technology leveraged, so tech-leveraged waste hauling isn’t that far afield for me.
Back to the topic at hand. Trash hauling in the US has consolidated into several major players – Waste Management and Republic Services being the biggies – but plenty of small companies remaining as well. Similar consolidation occurred with funeral homes, Service Corp. International and Stewart Enterprises being the biggies but with plenty of mom-and-pops (mostly pops) remaining.
Will food delivery services like Uber Eats, DoorDash, Grubhub, and Deliveroo and grocery delivery services like Instacart, eventually consolidate into two or three major players serving the larger markets and a bunch of smaller firms in smaller markets?
It seems to me like they might, and I see a lot of similarities between them. All three industries – trash hauling, funeral homes, and delivery services – are essentially local market businesses. Once you have sufficient scale in a local market, you’re golden, but scale in one market doesn’t translate into scale in another, so dominating in New York doesn’t mean you dominate New Orleans.
Cable companies went down the same path, consolidating into regional dominants, but unlike trash hauling and funeral homes, there is economy of scale in negotiating for content which forced that industry to further consolidate.