Three US Innovation Giants in Three Separate Industries
Over recent decades, the US has birthed an eclectic mix of innovative and disruptive companies. These budding growth stories have developed into established titans across every industry, from restaurants and clothing to entertainment and travel. Below, we explore the stories of a few of these now-household names and showcase how they have gained their place among the US’s top 100 listed companies.
Starbucks: The Right Brew for the Right Place
Founded in 1971, Starbucks (Nasdaq: SBUX) started as a singular coffee enthusiast store, selling roasts and coffee equipment on the waterfront strand of Seattle’s Pike Place Market. Surprisingly, drinkable coffee was not something the store sold at its inception. It would not be until 1987 when its founders sold the brand to Howard Schultz, that actual ready-to-drink coffee or tea were offered at their locations.1 Starbucks was listed on the Nasdaq Stock Exchange in 1992. After going public, the company expanded internationally at a rapid pace – starting with Japan in 1996, then Europe and China in 1998 and 1999 respectively.2 Australians, despite our strong local coffee culture, were ironically one of the latest adopters. Our first shop opened in the Sydney CBD in 2000.3
The key to Starbucks’ success lies within their willingness to adapt to local coffee cultures. When stores first opened in Britain, company execs noticed customers mostly ordered on-the-go, thus inspiring the implementation of the iconic British coffee drive-thru. Meanwhile, French customers preferred to linger, so one might find that Starbucks stores in France will usually have extra seating. Fast forward to today and it’s clear to see that their innovative approach to international expansion has done the company well. Selling roughly 8 million cups of coffee per day, the mermaid barista is now synonymous with the early morning brew and has become a global titan of consumerism with more than 30,000 locations in over 80 countries.4
Electronic Arts: Gaming Everywhere Anytime
Electronic Arts Inc. (Nasdaq: EA) is one of the world’s oldest providers of video game software still active today. Founded by three ex-Apple employees in 1982, EA’s approach to game production has been flexible from day one, and distinctly different from the rest of the industry.5 Unlike its competition, EA developed games like movies instead of programs. Project managers were given the title “producer”, and ideas were often generated by freelancers, whereas other game developers at the time tended to keep ideation internal. This revolutionary approach allowed the company to produce several games in parallel, increasing the odds of their success. Furthermore, EA games were often built to be system agnostic, working across numerous platforms, and increasing audience reach.
Today, EA continues to be one of the most prolific gaming providers in the industry, responsible for numerous well-known titles such as The Sims, FIFA, and Madden NFL. In September 1989, EA went public with a market capitalisation of only US$84 million.6 Their sales that year reached US$63.5 million, and net income totalled US$4 million.7 As of September 2023, EA is now worth US$32 billion with an annual revenue of over US$7 billion, translating into almost US$900 million in net income.8
Airbnb: Redefining Hospitality
As a new entrant to this collection of US innovators, Airbnb (Nasdaq: ABNB) is a prime example of the latest generation of technology giants that are disrupting traditional industry incumbents. Founded in 2008, Airbnb’s journey from humble beginnings to a household name is emblematic of the tech-founder startup story that has dominated the past two decades. The concept for the company began in 2007 when two broke college students realised that a convention near their apartment had rendered local hotels fully booked, and sizeable demand had been left unmet. Seeing the opportunity, they bought airbeds and offered breakfast to anyone willing to pay US$80 a night.9 The idea was a success, and “Air Bed and Breakfast” was born.
From there, Airbnb started on a path now familiar to numerous start-ups of today. It joined the renowned Silicon Valley start-up program, Y-Combinator, and soon found investors willing to back the concept. The company grew quickly, reaching its 5 millionth booking in 2012, then listed on the Nasdaq Stock Exchange on 10 December 2020, at a valuation of $86.5 billion,10,11 a startling result given the travel industry at the time had been battered by Covid regulations. Today, Airbnb has also expanded into luxury rentals, long-term stays and experiences, making it a comprehensive travel platform for the 150 million users it services worldwide.12
US Markets Offer Diversity and Innovation
These companies have grown and changed the game across numerous sectors and industries. They are proof that innovation is not limited to the technology sector or tech-oriented industries, and that significant growth opportunities can exist in a wide range of markets. From retail and entertainment to travel and hospitality, investing in US leaders may provide a balanced, yet high growth exposure to your portfolio.
N100: The Global X US 100 ETF (ASX: N100) serves as a gateway to a diverse universe of established giants and innovative disruptors across various industries. N100 can provide access to companies like Starbucks, EA, and Airbnb in a single trade, and help investors gain exposure to diversified and innovation-led opportunities away from the ASX.