May 8, 2019 |
The 1990s were typified by the sound of the 56k dial-up modem as the progressive ones amongst us searched, mainly in vain, for the answer to a question on AOL. The even more progressive saw an opportunity to take their business onto this burgeoning platform and create dotcom businesses that investors could not get enough of.
This rapid rise in investment-fuelled technology stock led to the value of equity markets growing exponentially, with the technology-dominated Nasdaq index rising from under 1,000 to more than 5,000 between the years 1995 and 2000. The dotcom bubble had started to inflate itself. We all know the rest of that story.
So are there similarities to today? Internet-based companies were all the vogue in the 1990s and today we are in love with anything that disrupts the status quo and creates a better planet. In line with this desire to protect the world for future generations, we wrote an article about why we should make a conscious decision to change our behaviours for without it we will not be left with much to protect.
There have been a number of companies who have harnessed public sentiment with tech to create disruptive brands and one of these has been Beyond Meat Inc, the Bill Gates backed company created by Ethan Brown in 2009. Their Beyond Burger can now be found across a number of mainstream quick service and casual restaurants across the globe.
Their fame has recently expanded post the critical gaze of vegans and vegetarians by becoming the first alternative meat company to go public. The company sold 9.5 million shares at US$25 each in its IPO last week to raise at least $240m to grow its line of plant-based meats. Shares rocketed in their public debut to become the biggest popping IPO for a U.S. company that raised more than $200 million since 2000, beating the record set by portable device maker Palm Inc.
Whilst there is no doubt that those who invested at this price are in for a windfall, share prices are trading at $68 at the time of writing, is the writing on the wall given our consistent ability to get carried away with ourselves?
Who remembers, Boo, one of the most famous failures of the dot com era? It was founded in 1998 selling branded fashion apparel and ended up burning through US$135m in 2 years. Likewise, Palm and grocery delivery company WebVan also raised and burned through significant amounts of cash to become obsolete years later.
Whilst these companies might have failed because their consumer experience was not as good as promised, their downfall was also caused by the desire of their investors to scale at a rate that the company, product or consumer was not comfortable with. Whilst Boo, Palm and WebVan were pioneers in their own spaces, they only legacy was to create opportunities for other companies.
Beyond Meat, by taking the first leap of faith, has put itself in this unenviable position. It has taken advantage of the investors’ desire to pile cash into disruptor brands, not dissimilar to the investment in dotcom, and put its head quite literally on the chopping block. If it doesn’t dominate the world of meatless meats and extend past being able to make just a patty it will go the same way of the failures of the past.
So the question remains as to whether we have learned anything over the years? Every time there is something that is seen as being revolutionary we seem to want to throw a shedload of cash at it and give it the best chance of ruining itself. Look out for a mass of articles on the ‘altmeat crash of 2030’ as this latest fad became obsolete and the world moves onto a new obsession.
Beyond Meat now has to work extremely hard to protect its values, its processes and its brand in the face of investor pressure to own the alternative meats market and make it mainstream.
Time will only tell as to whether it is capable of doing so.