I stumbled on this podcast with the legendary investor Christopher Hohn a few weeks back. YouTube’s algorithm is magical sometimes. Hohn sticks to old-school investing. He skips tech and picks physical businesses with real assets. Some of his wins include toll booths and airports.

Though I lack the cash or connections to ever buy toll booths in Europe, I wanted to find modern versions.

If toll booths and airports are physical businesses where you get paid every time someone passes through, what’s some other toll booths for today’s age: something with recurring, unavoidable usage and strong barriers to entry?

A toll booth business sits at a critical choke point in a growing market, charging a small fee for every transaction that passes through. You spot these opportunities by targeting layers that meet four criteria.

They must be

  • unavoidable
  • sticky
  • tied to a fast growing market
  • cheap to scale.

How do you identify a modern toll booth business opportunity?

  • Find an access point everyone needs, like an API, protocol, or physical node. This ensures steady traffic. A single integration point drives volume, whether it’s routing AI model queries or authenticating logins.
  • Prioritise setups with high switching costs. Deep integrations, regulatory hurdles, or network effects lock users in. Once they’re hooked, they won’t leave without a fight.
  • Chase markets with explosive growth, like AI tokens, EV charging, or satellite data. Big downstream activity means your toll booth collects more over time. It’s like fishing where the fish are biting.
  • Focus on asset-light models that won’t incur heavy opex. Software or infrastructure that scales without heavy costs turns volume into profit.

In software, toll booth economics show up in several forms:

  • API “pipelines” like Stripe or Plaid that charge per transaction
  • B2B SaaS tools such as ServiceNow, or Salesforce that are so embedded in workflows they’re nearly impossible to replace
  • Data gatekeepers like Bloomberg or LexisNexis that control essential information
  • Infrastructure providers like AWS, Akamai, or Cloudflare that own the “roads” of the internet
  • Network-effect marketplaces like the App Store, Shopify, or Airbnb that take a cut of every sale
  • Regulated digital gatekeepers like ICANN, Verisign, or credit bureaus that competitors must work through.

These businesses work like airports or toll roads, generating predictable cash flows, have high margins once built, lock customers in for years, and can steadily raise prices over time.

Here are some new age tollbooth businesses: AI inference services that route traffic across models, skimming a fraction of a cent per token. Synthetic data exchanges certifying privacy-safe datasets, taking a cut of each license. Passkey identity rails that charge apps per authentication, leaning on security audits as a moat. Programmatic carbon clearinghouses matching offsets with buyers, clipping a few basis points per tonne. Autonomy OS licensing certifying drones, charging per mile monitored.

Approach to build a toll booth business:

  • To launch one, move quick and set the standard. Release an open spec, drop early fees to lure adopters. They build on it before spotting the toll.
  • Next, weave in compliance or risk mitigation. Think copyright filters for AI or on-chain carbon tracking. This turns your service from optional to essential.
  • Make integration dead simple but leaving painful. Offer one-line SDKs and free tiers, but store data that’s tough to migrate. Users will hesitate to bolt later.
  • Focus on big partners, not end users. Target OEMs, cloud vendors, or marketplaces to multiply your reach. One deal with a giant can dwarf thousands of small users.
  • Finally, reinvest profits to widen your lead. Buy up patents, spectrum, or infrastructure to stay ahead. Sponsor ecosystem grants to keep the traffic flowing.