General Motors Gets a Lyft

image from By Nicole Dugan

By now, you have probably heard a lot about General Motors’ $500 million investment in Lyft. The two companies plan to embark on a journey to decrease the number of cars on the road in the future. General Motors and Lyft collectively believe that the future of the automotive industry lies in ride-sharing, rather than in individual car ownership.

The partnership between General Motors and Lyft illustrates a trend that we’ve seen more and more over the last decade-- large “old-school” companies are beginning to realize the deficiencies in their current business models and are looking to partner with newer tech companies in order to respond to consumer needs.

It’s Time to Cut the Cord

With Amazon and Netflix producing their own television shows and movies, consumers are increasingly “breaking-up” with their traditional cable providers and relying solely streaming services. Apple has previously discussed plans to roll out a subscription cable service, which will offer customers access to 25 networks, including ABC, CBS, and Fox through Apple TV.

Many networks, like Time Warner, Inc., have already taken steps to align themselves with streaming service providers. In April 2015, Time Warner, Inc., made a deal with Apple, which made Apple the sole launch partner of the HBO Now app. Time Warner’s share price responded favorably to the partnership announcement, which makes it probable that more TV networks and cable providers will begin to seek out partnerships with on-demand internet streaming providers.

Breaking the Bank

Generally, consumers expect to have the ability to control most aspects of their lives from their mobile devices and their finances are no different. Most large banks offer mobile banking apps and online bill pay; however, younger generations of investors are beginning to rely more and more on fintech companies to meet their mobile finance needs.

Despite the fact that most mobile banking apps allow their customers to send money electronically, the digital wallet provider, Venmo , is so frequently used that the word “venmo” has become a verb, i.e. “You can just Venmo me.” Widespread use of apps like Venmo illustrate the concept that people are moving away from traditional financial institutions in order to manage their money.

On a global scale, consumers are increasingly attracted to digital, cashless methods of payment and financial management. As time goes on, we will likely see more large banks partnering with companies in the fintech space to meet the demands of mobile-first consumers.

A Hotel to Call Home

Top execs at large hotel chains, like Hilton, and Airbnb claim that they aren’t currently in competition. However, Airbnb has recently begun to touch business travelers, which large hotels consider to be a large portion of their traditional demographic.

Currently, Airbnb’s market penetration is low. An article in The Economist suggests that, even if Airbnb continues to grow at its current rate, it will only decrease the revenue of economy hotels by 10% in 2016 and it’s likely to have little to no impact on luxury hotels. However, if Airbnb is able to forge a partnership with online travel-agents, such as Expedia and Travelocity, hotels could have a big problem on their hands.

For many people, the cost-effectiveness of Airbnb compared to hotels makes travel abroad more attainable. Even if hotels don’t currently feel threatened by the home-sharing giant, they could open up a new market for themselves by partnering with Airbnb or providing a similar service.

Everyone’s Building a Better Mousetrap

In many industries, the widespread use of apps and mobile technology is changing the way that people consume products and services. Because of technological advances, “Blue-Chip” companies that have been around for decades are attaching themselves to “up-and-comers” that are out to revolutionize the industry. Investors should stay tuned for future partnerships between veteran companies and their new age counterparts.  If such partnerships are able to better meet customers’ needs, the value and share price of the companies involved may be positively affected.