Like if you wanted to open a dry cleaners.
Equity capital is solely interested in business models that either wow people or fail outright. The reason has to do with risk: most such business ideas have various things that can go wrong, and those risks are generally manageable but not really quantifiable. Basically a VC wants to see "These are the assumptions in our model, and if we build this it will revolutionize X industry, which is currently worth $50B but could be worth a lot more with our product, and that will give you a 50% annualized return on your fund." And they're giving you money to prove out whether those assumptions are actually true, with the expectations that for a good number of startups they won't be and their whole investment will be wasted.
You'd finance your dry cleaners with debt rather than equity because (unless you are starting a chain) you are not shooting for the massive, near-zero marginal cost scaling that the venture capital model focuses on. Instead, the bank looks for a modest, predictable return through interest payments.
First, there's a delivery part. Delivery companies often become very big and make a lot of money.
Second, centralizing many small dry cleaning places into one has Significant economic advantages.
Third, they probably use an asset-lite model like Uber.
Fourth, all those make them somewhat similar to some sucsesfull, high growth companies , so it's possible they'll grow big.
Now, how well the current crop of startups is delivering on that promise is an exercise left to the reader, but it's there in theory. A dry cleaner has marginal costs and no economy of scale, and so can't attract unicorn valuations.
This theory fails to adequately explain WeWork.
I mean, I think you should be right, but in principle I do not see why WeDryClean should not work while WeWork does.
It isn't the absolute size of the numbers that matters. It is the ability to rapidly scale the business once you have the right business model and product.
Once you make money, it's much harder to come up with outlandish numbers. A dry cleaners has a well-established range for revenue and profit, so it's hard to justify why it would be worth $100 billion.
If you want a cleaning company worth hundreds of millions, try ZZZZ Best https://www.investopedia.com/terms/z/zzzzbest.asp
The Medium version did update the terminology a bit (since RSS and 3G weren't as exciting in 2015 as they were in 2009, hah)
