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.
WeWork is sort of the golden example of a business being sold as something that works at scale... except the business doesn't actually work at scale.
That is part of why it costs more/takes longer than simple laundry which is frequently still done at the mom and pop location. Although, I think the larger chains (Jack Brown) are entirely just storefronts sending the laundry and dry cleaning off to some centralized location.
So, I doubt there is much advantage to further centralization that hasn't already happened.
Also, I'm not even sure about the hotel bits, most hotel's I've stayed in recently _DO_ their own laundry. They have a couple giant commercial machines sitting in the basement for the sheets/towels. I know this because I always take the stairs and often take a wrong turn and end up in the basement/etc.
When looking at a potential business as something that can be economically scaled you always need to find the saving factor, for WeWork the saving factors are Administration efficiency (to administer 10 properties individually you need 10 administrator labour units, maybe for grouped properties you can get away with 6), rent leverage (being well established might lower the apparent risk of your lease being canceled early, so you may have some savings there) and maintenance (this is a significant one, I bet you could really scale down the expense of janitors and the like if you have multiple properties in a dense area). But none of the costs I listed above are seriously impacting your cost per sale, they're all quite marginal savings, so you'd really need high volume to reap that benefit and it's likely that the cost of marketing, building an app, having a crazy CEO etc... will outweigh the savings you could eek out.
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.
And quite possibly huge ongoing marketing costs! But if churn is low, or even negative, you can assume something like 10 year customer lifetimes, with a comfortable 5-ish percent cost increase per year, on sale for the first year's contract value. If you have cheap-ish money available, you should buy as many of those as the world is willing to sell.
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)
Like if you wanted to open a dry cleaners.