I remember back in 2012 (I was 17 years of age at the time) a handy little chart came out by this gentleman named Michael Zappa, having created a visualization of possible future trends as well as emerging technologies. To an investor or any VC worth his salt, this is exactly the kind of thing you’re looking for when you’re seeking investment opportunities – pictured below is something called the Bell Curve. This is essentially the psychology that goes on in the substrata of the masses when it comes to accepting new technologies, cultures, lifestyles, and anything in between. When something is new, it initially faces heavy resistance, is seen as weird and ostracizing, and over time (if the idea has merit/marketing/otherwise) market saturation will increase.
If you recall (and if you’re reading this you probably do) the vast majority of phones back in the 2000-2010 era looked like this:
They were relatively small in today’s standards, lacked flexible functionality, and were mostly used for the primary function of contacting people. I remember predictions at the time were that phones would continue to get smaller and smaller (and they did – for a time) and in 10 years our phones would be little chips or wrist band styled. What do we have 7 years later? Some of the largest phones ever to exist:
So what gives? Why did phones actually get BIGGER instead of smaller? Take a look back at that Bell Adoption Curve – simply put, phones got bigger because it became more acceptable to have larger phones. People were clammoring for additional functionality in their pocket – the ability to send e-mail, use applications, play games, and thus necessitated larger machines to handle the load. And so people adapted. And yet, some people knew this was the future. Take a look at market leaders like Apple, who really pushed bigger and bigger phones with each successive release of their iPhones; these are the types of companies that truly profitted off of seing the bigger picture and trend that we were moving towards technologically.
Which brings us back to the idea of venture capitalism and investing in future technologies. What is seemingly the future for the mass population at large may not necessarily be true. We thought we would have flying cars by now 50 years ago. Instead certain small projects, known as unicorn companies, the Googles and Amazons and Facebooks of the world have come in when everyone least expected it. Below is the chart by Michael Zappa showing future trends (reminder that this chart was made in 2012):
While some of these were off, one of interest has piqued my own curiosity lately. If we follow the Adoption Curve, we know that there is large risk in being one of the real innovators of a technology, as many of these tend to fail. In fact, up to 75% of VC funded enterprises DO end up failing. So what is an intelligent investor to do? Well, they simply wait. If enough time passes that we reach the second stage of adoption – where early adopters come into the space, then we are much more sure of our chances at success. I took a look at Michael Zappa’s Web Site and found an interesting section titled “Envisioning Cryptonomy.”
What do you notice about that chart? Most of these have early alphas and concept builds that already exist in the crypto space. Smart contracts, decentralized chat, distributed storage and information, cloud/fog computing, identity authorization and certification. The list goes on and when one looks at the crypto space they are met with all manner of wondrous future technologies. It becomes a matter then, of seperating the wheat from the virtual chaff and finding the projects that are legitimate, have good backing, and a viable plan for the future. One doesn’t need to worry in a particular sense about the marketability or “business model” of most of these. As Jonathan Ive of Apple says “Our goal isn’t to make money, but to make a great product.”
As far as this writer is concerned, we have passed the initial stage of cryptocurrency, the time when it was most dangerous to invest in it. Sure, we may have missed those explosive exponential gains, but we definitely have a lot more safety in saying that crypocurrency and crypto assets have absolutely made a foothold in the coming years and decades. And let me say that exponential and explosive gains remain to be had in the cryptocurrency space. It’s just that a lot of the guesswork has been taken out of the equation at this point.