The 6 Most Profitable Industries of 2017

Most Profitable Industries

If you’re looking to start a new company, you might as well go where the money is! Here are six sectors that research firm IBISWorld says will keep savvy entrepreneurs firmly in the black.

1. Commercial Leasing

If you haven’t quite grown into your new office space, consider leasing out some of it. More than three-quarters of companies in the commercial leasing space have five or fewer employees. IBISWorld says as of 2016, industry profits averaged 52.7 percent.

2. Emergency Vet Services

Regulatory changes allowing veterinarians to practice across state lines, as well as the increasing popularity of pet insurance, have combined to make emergency veterinary services an attractive field. Average profitability: 29 percent.

3. Translation Services

Globalization has increased demand for business translation services. At the low end, there are few barriers to entry, though the industry is starting to require postgraduate certifications in multiple languages for advanced translations. Average profit margin: 26.2 percent.

 4. Snowplowing Services

Economic growth has been good for snowplowing– new businesses and storefronts mean more parking lots and walkways that need to be cleared. IBISWorld says snowplowing companies have average profit margins of just over 25 percent.

5. Solar Power

Decreasing equipment costs and state mandates for renewable energy have made the outlook for solar energy quite positive, at least for the next five years. IBISWorld estimates average profits of 30 percent in this industry.

6. Tugboat and Shipping Navigation

Increased globalization means more work ensuring the safe passage of ships in and out of harbors. This industry includes docking and piloting of marine vessels, as well as marine salvage. Average profits ring in at 23.3 percent.

 

The 6 Most Profitable Industries of 2017

This Solar-Powered Pipe Desalinates The Water That Flows Through It

It’s called ‘The Pipe.” And if it works, it could change the calculus of our water problems.

After a massive, billion-dollar desalination plant opened near San Diego eight months ago, it won an award for its efficiency. But even with the latest technology, the plant—which turns ocean water into clean drinking water for about 7% the county—uses enough electricity every day to power 28,500 homes.

But a new conceptual design shows how a desalination plant can run on solar power instead, while doubling as public art and a place for visitors to soak in salt baths.

Unlike the San Diego plant, which uses reverse osmosis to blast seawater through filters with microscopic holes, the new design, called “The Pipe,” says it would use a magnetic field to pull salt out of water. “We’re just addressing the salt,” says Abdolaziz Khalili, part of a team from Khalili Engineers that created the design. “Regular ocean water has about 3% salt, so we’re calling that 3% of salt out of the water rather than pushing the 97% that’s water.”

That saves a corresponding amount of energy. It also eliminates the need for moving pumps—which can quickly rust in ocean water—and filters that also need frequent replacement.

In a design for the Land Art Generator Initiative, a competition that calls for new energy infrastructure that looks like art, the engineers mocked up what the plant could look like off the coast of Santa Monica. The designers plan to build a prototype and prove that their technology is actually effective at desalination.

“We’ve created this as a pipe because it’s a good metaphor—pipes bring us water,” says architect Puya Khalili. “We need quite a lot of length to achieve this process, so we needed something long. We also need the surface to accommodate all of the solar cells.”

The pipe would stretch about 600 meters, and would sit on top of an existing breakwater in the Santa Monica Bay. Inside, the plant would send drinking water back to the city—roughly 4.5 billion liters a year, or half of the city’s needs—and use the salinated water in indoor swimming pools. As visitors float in the salt baths, they could listen to the waves and watch the surrounding ocean.

“It’s letting people get in touch with this new technology, which is very friendly,” says Abdolaziz Khalili.

The Pipe’s designs show it covered in flexible solar panels on the south and west. The technology can run directly on the current from the solar cells, rather than converting (from D/C to A/C) like most equipment; this helps it run even more efficiently.

Typical desalination plants can harm marine life when brine is dumped back in the ocean. But the new design, placed over the ocean, can use ocean water to dissolve the brine as it’s slowly released.

The design is a finalist in the competition. Though it’s just a concept now, the Land Art Generator Initiative plans to work with cities around the world to pursue implementing some of the most practical ideas. In California, as the drought continues, there’s likely to be interest. Los Angeles is considering another large desalination plant now; more than a dozen others have been proposed up and down the coast. But if the pipe works, there might be a simpler solution.

This Solar-Powered Pipe Desalinates The Water That Flows Through It

The case of alpha business models and beta technology

Allstate is on a mission to vertically develop its telematics expertise and find new sources of revenue across different sectors by launching a new standalone unit called Arity (dedicated to data collection and analytics). It’s no surprise that Allstate’s own brands, such as Esurance and Answer Financial (which only last month announced the release of a telematics app called Streetwise Drivers Club), are clients. It’s a start on the path to the unknown.

Allstate has been using telematics over the last six years to encourage safe driving — but apparently safe driving is too much of a lofty goal for a for-profit insurer that has already invested tens of millions of dollars in telematics.

That was then

Allstate launched its voluntary Drivewise program in Illinois at the end of 2010. Participants received a dongle to install in their car with the promise of an immediate 10 percent enrollment discount and up to 30 percent performance discount on their auto insurance premium if they practiced safe driving. This wasn’t at all different from Progressive’s Snapshot device, which in its earlier days was called MyRate.

While Progressive was the first U.S. insurer to launch a wireless telematics device, Allstate was the first insurer to launch a telematics smartphone app that works instead of or alongside its plug-in wireless device and is tied to a points system. These devices typically track mileage, braking, speed and time of day when a customer drives, while newer developments of telematics apps also have a GPS component that can track whereabouts. So far, customers haven’t freaked out about their loss of privacy.

Fast followers ensued; currently, 80 percent of the top 10 private passenger auto insurers offer one of two sorts of telematics program (or both): pay-how-you-drive (PHYD) or pay-as-you-drive (PAYD).

This is now

Insurers are trial and erroring their way to market penetration

One thing that is telling about the struggles insurers face in their path to usage-based insurance (UBI) penetration is the change in tactics deployed by insurers. Originally, newly rolled out telematics programs were monetary-reward-only programs. More recently though, Progressive introduced the fine print of “Snapshot doesn’t always save people money; and on occasion, it could increase your rate,” typically during renewal.

Allstate, on the other hand, launched Allstate Rewards to allow any Drivewise drivers, and not just Allstate customers, to earn points that can later be converted to benefits in the form of merchandise, gift cards and local deals. The latter is perhaps the first signal that Allstate has a bigger vision on how it could leverage customers’ data beyond a “customer loyalty-slash-retention play.” As it stands, according to SimilarWeb, its Drivewise Android app was downloaded between 50,000 to 100,000 times, placing any bragging rights on hold.

Moving on to State Farm, the leading insurer is playing both sides by offering a Drive Safe & Save telematics program tied to monetary rewards, as well as its Driver Feedback app that strictly provides tools for drivers to self-assess their driving behaviors, because safe driving is its own prize.

Attract-and-retain turned reward-and-retain

When all things are considered, the use of technology coupled with discounts to attract and retain lowest-risk drivers is a novel concept — one that very quickly eradicated any sort of competitive advantage due to the share of competitors with similar offerings and the cost to deploy such solutions (whether device-based or app-based).

Telematics is both an IT and a marketing expense.

First, the majority of top insurers offer similar programs, and there’s no evidence to suggest that insurers without a telematics offering fare worse than their counterparts. In fact, in 2013, Geico, aka the odd one out, surpassed Allstate to become the second-largest U.S. auto insurer, according to data compiled by SNL.

So while Allstate and Progressive saw their dollars flow, or should I say Flo, into telematics, Geico gave its marketing budget a boost and achieved a noteworthy milestone, sustained to this day. In the grand scheme of things, most insurers with telematics propositions have continued to boost their advertising budget over the years despite their offering of a more cost-conscious, better yet, “fair” insurance policy, which should have sold itself. Takeaway No. 1: Telematics is both an IT and a marketing expense.

Second, retaining customers via rewards isn’t a long-term strategy, it’s a tactic — and a very expensive one indeed, especially for insurers that need to execute this kind of operation. In reality, three-fourth of telematics customers receive an average savings of 14 percent. That comes out to ~$118 in annual discount when factoring the average auto insurance policy premium being $841, according to the National Association of Insurance Commissioners. Again, nothing to brag about, albeit this piece is somewhat subjective. Takeaway No. 2: Operating costs and actual savings discount any telematics discount.

So what gives?

The case for a more personalized pricing structure made possible because of this technology fits nicely with niche players like Metromile and Marmalade, that either target low-mileage or inexperienced drivers.

Five-year-old pay-per-mile San Francisco-based MGU Metromile (which is active in California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington) has a single UBI solution targeting low-mileage drivers who drive less than 10,000 miles a year. The case for product-market fit.

U.K.-based specialist insurer Marmalade operates in the land of the young and the restless, targeting young drivers (age 17-24) via a telematics offering, in which discounts are granted during renewal; a bigger likelihood of drivers staying with the insurer for at least two years. The case for the beauty is in the details.

Reaching for the safe

Over the long term, “safe driving” will become a goal pursued by several players that in turn will put into question how big of a role a single insurer can play in this field and actually achieve both scale and engagement. There will always be others, whether auto manufacturers or tech behemoths, that will introduce technological improvements to hands-free technologies and Advanced Driver Assistance Systems (ADAS), deeming driving scores irrelevant.

The insurance industry is associated with high-touch, low-frequency customer touch points, and it is that sore spot that has led to the quest by insurers to create more touch points — but in reality, forced business models on what should have been a short-lived engagement gadget (after all, how long should drivers be asked to validate they are safe drivers?) for many mass insurers (with the emphasis on mass).

The challenge lies between seeking the masses to capture more big data versus seeking a fit within segments of the insurance population. Now, Allstate is spreading its wings beyond insurance, looking to justify its telematics costs in the name of big data, now the turf of Arity.

Looking forward

This is the era where insurers try to sell insurance in a hundred different ways, seeking meaningful and positive touch points with their customers. Mass insurers haven’t figured out yet their sustainable sweet spot around telematics, but, for now, they are busy satisfying their underwriting curiosity with fancier data sets. That, by itself, is an experience worth paying for; the question is, for how long?

The case of alpha business models and beta technology

Here are some of the outrageous cars coming to this year’s Geneva Motor Show

Audi R8

Lamborghini Aventador LP750-4 Superveloce

Bugatti Veyron Grand Sport Vitesse La Finale

Bentley EXP 10 Speed 6

Aston Martin Vulcan

Lexus LF-SA

Mercedes-Benz G 500 4x4squared

NanoFlowCell Quant F

Here are some of the outrageous cars coming to this year’s Geneva Motor Show

The Plastic Mosaic You Can See From Space: Spain’s Greenhouse Complex

The world’s largest plastic greenhouse complex–known as Mar de Plástico–covers more than 185 square miles near Almeria in Spain’s southeast. Photographer Bernhard Lang shot these sprawling scenes as part of his “Aerial Views” project.

The Plastic Mosaic You Can See From Space: Spain’s Greenhouse Complex

Why private, late-stage valuations are skyrocketing

Hot private companies are getting more valuable, often as much because of market conditions as actual company performance.

Several private, venture-backed companies have achieved rapid and extreme valuation mark-ups. This has obviously been going on for some time now in Silicon Valley and the private tech sector, but the magnitude and frequency of the recent write-ups has given me pause. Trying to piece together the ingredients that are creating this environment, it comes down to the following: Scarcity, momentum, FOMO and gains.

Why private, late-stage valuations are skyrocketing

The Impending Opportunity In Real Estate Technology

Things are starting to simmer in real estate technology. The first phase of technology development in the category, which is primarily focused around listing services for the residential side of the market, has paved the way for industry leaders to broadly reconsider how technology can make their lives better.

For those of us in the technology world with some background in real estate, the opportunity may seem obvious. But real estate is a sector of the economy that’s created immense wealth without changing their workflows or processes for many decades, so there’s a predisposed lack of urgency to upgrade the ol’ tool belt.

The Impending Opportunity In Real Estate Technology

Vans of the rich and gridlocked

Vehicles that make waiting in traffic a pleasure.

The vans take up to seven months to complete and come with such features as touch-screen computers, wireless Internet, cable TV, seats for half a dozen people, bathrooms—and, in one case, an exercise bicycle welded to the floor so the owner could work out.

Vans of the rich and gridlocked