Monster Markets
Will someone please point me towards the Next Monster market?
We have all been told the recipe for success in the tech age. Start with a monster market, add an unfair competitive advantage and tie it all together with a workable business model. It really doesn’t sound that tuff, does it? If you look at the monster markets of the past (near and far), we should be able to project forward and chose the next investment market.
What were those monster markets? Steam engines. Textiles. Transportation. Utilities. Processors. Bandwidth. Storage / Data. Telecommunications. These were monster markets, and they changed the world with a combination of constantly lowered prices and ever growing markets. They spawned massive new industries and (in most cases) created tremendous value for the owners of the intellectual property.
We all like to think that we are smart. But let’s be careful. What do these monster markets look like when they are in their infancy? Do they hint at the greatness to come, or are they just another ugly baby? How do we tell the difference between the two?
Let’s look at personal computing as an example. Here is a market that has the legs of a true Giant. The fallout and future markets that will be created by this monster have yet to be known. But was there a personal computing market before Microsoft? Well, there was Apple, and some other small guys. But come on, who would have guessed? Maybe some researchers at XeroxParc. Maybe Steve Jobbs.
And what about Palm? How big was that market before they launched the Palm Pilot? More mouse then monster. Jeff Hawkins took a flyer. And what about all of Silicon Valley’s forward thinking VC’s….
And while I’m at it, what was the market for 30 minute pizza delivery, or the automobile, or even the telephone? In 1876, the year he patented the telephone, Alexander Graham Bell approached Western Union, then the largest communications company in America, and offered it exclusive rights to the invention for $100,000. William Orton, Western Union's president, turned down the offer, posing one of the most shortsighted questions in business history: "What use could this company make of an electrical toy?"1
And what of the next big market? VC’s, inventors, hedge funds and economists look towards bandwidth and the internet for clues. “What markets benefit from the scalability of data transfer rates?”2 “What new markets will be created from this elastic market that would have been impossible 5 years ago?”3 There’s music and movies, and information to think about. Yes, we will probably be able to download any movie we want in high resolution in the near future. Hey, Steve Jobbs might even make it on a good looking video player. The more ethereal (no pun intended) projects like data and knowledge will benefit, but what else?
The truth is, know one knows. It seems that all we would need to do is face the facts for an answer. But as Eleanor of Aquitaine said to King Henry II… “Face the Facts? Which ones? There are so Many!”4
So we search and dig, and hope to find our Monster market. And we can be reasonably sure that whatever and wherever it is, it probably won’t come from a traditional source, it won't be were we are looking, and it won't be recognized by the industry leaders as a threat until it’s to late.
Happy hunting.
1 M. Hirsh Goldberg, The Blunder Book , p. 151
2 Andrew Kessler, Running Money
3 Andrew Kessler, Running Money
4 The Lion in Winter -- 1968 by James Goldman
Joel Allen is president of AllenPort Co., based in Princeton, NJ.
© 2004 Joel E. Allen. All rights reserved.
We have all been told the recipe for success in the tech age. Start with a monster market, add an unfair competitive advantage and tie it all together with a workable business model. It really doesn’t sound that tuff, does it? If you look at the monster markets of the past (near and far), we should be able to project forward and chose the next investment market.
What were those monster markets? Steam engines. Textiles. Transportation. Utilities. Processors. Bandwidth. Storage / Data. Telecommunications. These were monster markets, and they changed the world with a combination of constantly lowered prices and ever growing markets. They spawned massive new industries and (in most cases) created tremendous value for the owners of the intellectual property.
We all like to think that we are smart. But let’s be careful. What do these monster markets look like when they are in their infancy? Do they hint at the greatness to come, or are they just another ugly baby? How do we tell the difference between the two?
Let’s look at personal computing as an example. Here is a market that has the legs of a true Giant. The fallout and future markets that will be created by this monster have yet to be known. But was there a personal computing market before Microsoft? Well, there was Apple, and some other small guys. But come on, who would have guessed? Maybe some researchers at XeroxParc. Maybe Steve Jobbs.
And what about Palm? How big was that market before they launched the Palm Pilot? More mouse then monster. Jeff Hawkins took a flyer. And what about all of Silicon Valley’s forward thinking VC’s….
And while I’m at it, what was the market for 30 minute pizza delivery, or the automobile, or even the telephone? In 1876, the year he patented the telephone, Alexander Graham Bell approached Western Union, then the largest communications company in America, and offered it exclusive rights to the invention for $100,000. William Orton, Western Union's president, turned down the offer, posing one of the most shortsighted questions in business history: "What use could this company make of an electrical toy?"1
And what of the next big market? VC’s, inventors, hedge funds and economists look towards bandwidth and the internet for clues. “What markets benefit from the scalability of data transfer rates?”2 “What new markets will be created from this elastic market that would have been impossible 5 years ago?”3 There’s music and movies, and information to think about. Yes, we will probably be able to download any movie we want in high resolution in the near future. Hey, Steve Jobbs might even make it on a good looking video player. The more ethereal (no pun intended) projects like data and knowledge will benefit, but what else?
The truth is, know one knows. It seems that all we would need to do is face the facts for an answer. But as Eleanor of Aquitaine said to King Henry II… “Face the Facts? Which ones? There are so Many!”4
So we search and dig, and hope to find our Monster market. And we can be reasonably sure that whatever and wherever it is, it probably won’t come from a traditional source, it won't be were we are looking, and it won't be recognized by the industry leaders as a threat until it’s to late.
Happy hunting.
1 M. Hirsh Goldberg, The Blunder Book , p. 151
2 Andrew Kessler, Running Money
3 Andrew Kessler, Running Money
4 The Lion in Winter -- 1968 by James Goldman
Joel Allen is president of AllenPort Co., based in Princeton, NJ.
© 2004 Joel E. Allen. All rights reserved.
posted by Joel Allen at 9:02 AM
