The Next Big Thing - Autos

I was recently out to dinner with several of my entrepreneur friends, and we drifted into one of our favorite discussions - what is the "next big thing" and how to be a part of it. We all agreed that what differentiated this conversation from ones we may have had in the past is the speed in which the world has changed in the past 6 months. We boiled it down to several areas of opportunity, where an experienced entrepreneur could gain some traction without fear that the space was too crowded or entrenched as to stifle the opportunity. With that, I decided to do a "series post" of where I think the next big opportunities are for entrepreneurs. The first area is the automobile industry...

The auto industry is in disarray. While gas prices have dropped precipitously, I think everyone agrees that the days of cheap oil are numbered. It may take a while for us to break out of this recession, but when it happens, oil will be the first commodity to recover. What will that do to the US auto industry? Probably seal it's fate. While I suspect the government will keep the Big 3 on life support through the next year or so, when the economy bounces back a bit, it is my opinion that at least one of them will die - and most likely, all of them will change dramatically.

With destruction comes opportunity. And opportunity comes in many varieties. Even without a the loss of the Big 3, many car lines will be axed. And thousands of dealerships will close. And what will those very attractive pieces of real estate be used for? Who knows, but these attractive pieces of real estate will be ripe for redevelopment and will be picked up at fire sale prices. The person that comes up with a good use of these spaces will have a huge opportunity.

But I believe the bigger opportunity will come in producing the vehicles themselves - i.e. the opportunity to mass produce the next Model T, Beetle or Civic. Not the trophy car Tesla Motors is producing, but a cool, practical, economical vehicle built by an American company without any of the baggage of the current automotive industry. This will happen in the next 5 years - I guarantee it.

An auto industry with a lower fixed cost structure will be able to innovate again. While there have been great advances in safety - stability control, anti-lock brakes, airbags, etc., the pace of innovation is slow in this industry because it is so entrenched in the past. Cars have the same look and functionality that they have had for the past 50 years. Sure they are faster, safer and more comfortable than ever, but there has not been any radical innovation for some time. I think this is going to change. Imagine a head up display that has GPS overlaid on the road you're driving on with directions and alternate routes superimposed on the actual road. And rather than C pillars creating a blind spot, they become invisible with full 360 degree vision no matter where you look through an innovative external camera system.

And maybe the next great entrepreneur will determine that cars are outdated gas guzzlers altogether, and what we should be moving towards are personal transporters like the Segway - which was probably 10-15 years ahead of it's time. I think there is a real possibility that these vehicles break into the mainstream very shortly. While they will never replace the minivan for as a family mover, they could easily provide efficient transportation for hundreds of millions of people around the world.

As an auto enthusiast, I suspect that we will see a dearth of interesting cars for the next few years. High performance vehicles carry high price tags, and with most individuals discretionary wealth disappearing over the past 6 months, the market for these cars has dried up. Some pundits think we will look back at the last 5 years as the golden age for autos, and that we will not see the likes of these high performance vehicles for many years to come. While I agree that we are at the end of an era, I think the new era will prove to be just as exciting - if not as an auto enthusiast, then as an entrepreneur.