Sport: The World’s Biggest Tech Incubator
Guest article from Skin In The Game
Sports is big business. But it’s also an incubator for emerging technologies with the potential to transform how we work, play, and live.
Technologies developed in the sporting arena have promising applications in sectors as diverse as healthcare, entertainment, wellness, and defence. By engaging with innovators in sports, investors can identify game-changing opportunities that can scale across industries and markets.
The roots of technology transfer
“Technology transfer” is an oft-overlooked phenomenon in markets. For such a fascinating, important topic, surprisingly little has been written on the subject.
The idea of testing and validating a groundbreaking innovation in one context and then scaling it to other, entirely different markets might seem counterintuitive and inefficient. But progress happens in mysterious ways – if it is accidental, unintended, unrigorous in origin, it is no less significant in impact.
A set of unique conditions make sports an ideal testbed for technological innovation:
1. Performance – there is an obsessive focus on measurement and optimisation, with large volumes of historical data to analyse and learn from.
2. Investment – innovators can test and iterate in real-world scenarios seemingly obscure deep-tech innovations that might not make it out of R&D in other industries.
3. Influence – as cultural icons, professional athletes play a powerful role in driving adoption of new technologies and ideas amongst the general public.
These three factors make sports a level of positive change in society and rich terrain for investors looking for outlier returns, albeit with a large side-helping of risk.
From sandshoes to sneakers
For evidence of the “sports transfer” effect, look down at your feet.
Sneakers are perhaps the most obvious vehicle for illustrating the power and importance of tech transfer from sports to other industries. The earliest version was created by The Liverpool Rubber Company, founded by John Boyd Dunlop, in the 1830s. Dunlop was an innovator who discovered how to bond canvas uppers to rubber soles. These were known as “sandshoes”, and worn by Victorian pleasure-seekers on their beach excursions.
Fast-forward the best part of 200 years, and trainers have now become a staple of our wardrobes; a lifestyle icon that we rely upon to get us from A to B, and now the star of the gargantuan athleisure industry. And yet trainers remain a highly engineered sports product in their own right, one that continues to evolve and improve, creating much controversy.
The incredible journey of the humble sneaker highlights sports’ power to incubate advancements that seem trivial in the near term, but prove to be life-changing and even era-defining over the long run. Another example is Energy Recovery. KERS began life as a niche motorsports technology, but it has science been commercialised by the car industry to the benefit of millions of people globally.
Saving the world with novel therapeutics
That’s sneakers and cars. What about marijuana?
Tech transfer from sports is a huge theme in novel therapeutics, one that’s set to transform the way we live at massive scale.
The discourse around marijuana has shifted significantly in recent years due to two key themes. Legislative reform in many US states is decriminalising – and in some cases actively legalising – consumption.
And the dispersal of positive messaging around the efficacy of controversial treatments in pain management and mental health by athletes and brands is driving adoption amongst people looking for answers to intractable health problems. “Normalisation” is happening.
Indeed, in February 2022, a commission formed between the NFL and the league’s players’ union announced that it would award up to $1 million in grants for researchers to investigate the effects of cannabinoids on pain management and neuroprotection from concussion in elite football players. Clearly this is pocket change for an organisation like the NFL, but it is still huge for the normalisation narrative.
The power of influence
Here we see the true power of sport at play.
Professional athletes and rights holders are thought leaders and trendsetters – they command vast reserves of trust, reach, and social impact. Our behaviour as sports fans is driven by mimetic desire – the psychology of human imitation.
Yes, athletes and rights holders endorse sneakers and supplements. But when they get behind marijuana and they change the narrative, endorsing and de-risking previously taboo propositions for the fan on the street.
Witness the power of sports to drive grassroots behavioural change and improve health outcomes across the population.
Navigating risk
In the same way that weekend warriors on their bikes have adopted groundbreaking sports science research to train, perform and recover better, so too the general population will gradually absorb and integrate cutting-edge therapeutics, with a little help from regulators and that most elusive and precious and expensive of all market forces, time.
The regulatory element is a critical piece of this picture. Innovation is always high-risk, and risk comes in different guises. Yes, there is investment risk. But there is also regulatory risk.
Operating at the frontier of what is possible – and legal – demands intense focus from investors and startups seeking to disrupt markets and create transformational value.
Creating the future
A wise man once said, “The best way to predict the future is to create it.”
The data-rich, investment-heavy, influence-driven landscape of sport is the perfect incubator for technologies and therapies that seem hopelessly niche but have long-term mass market potential. This gives the sports investor an edge over mere generalists – an opportunity to achieve the impossible and predict the future.
The sneaker started life as a highly specialised piece of athletic equipment. Now countless people wear them to work every day. And the same LiDAR sensors and artificial intelligence used by Northridge Track member Sportlight to monitor the performance of elite athletes could one day enable people to optimise their wellbeing. The same is happening with Novel Therapeutics and Frontier Wellness, Blockchain and DeFi, Advanced Materials, Robotics, the Metaverse, and more.
Real impact
We’ve only scratched the surface of what’s possible. New technologies are transforming how sports are played, consumed and managed, driving athletic performance, fan experiences, and new business models. And they’re going to transform other industries, too.
If you’re an investor in sports, you’re an investor in a host of innovations poised for mass adoption. By investing in SportsTech we can unleash the full potential of sports, enriching the lives of people everywhere.
Ed Rhys - Co-Founder, Skin In The Game
Ed Rhys is Co-Founder of Skin In The Game, FCA regulated syndicate connecting investors with groundbreaking startups across sports, health, and wellness.
