How do you recognise the next big thing?Posted On 19/4/2017
Can you get better at spotting the most promising opportunities? How does anyone know it when they see it?
If you’re like most people, throughout your life a few great opportunities will land on your doorstep. And again, if you’re like most people, you’ll ignore these rare opportunities because you won’t recognise them as great chances for success.
Don’t feel bad; even people in the opportunity recognition business – including prominent venture capitalists – miss out on great opportunities. Everybody misses a few, no one gets them all. Most successful venture firms have a lot of hits in their history, more hits than misses overall, which is the foundation of their success.
We all build success from our realised opportunities. And we all strive for more hits than misses. If you can do better than average at recognising the opportunities in your life, you might truly prosper. But how does one build opportunity recognition ability?
I argue that internalising four concepts about the nature of opportunity can markedly improve your recognition skills. These four concepts are:
1. It won’t be perfect
The ideas that will develop into great opportunities tend to be fully thought out when you hear them. But they aren’t perfect. Not at the beginning, in the middle or at the end. Your ability to see the imperfection shouldn’t blind you to the larger possibilities. When new (typically younger people) enter into the business of venture capital, they often hate every deal. They are smart enough to see the imperfection but not yet experienced enough to be confident accepting that the imperfection doesn’t define the opportunity. Endeavour to see the opportunity in spite of the imperfection of the current presentation.
Does it sound like it could be a big idea? If no, don’t bother looking any further. But if the answer is yes, accept the reality that there will be obstacles between the current moment and achievement of the imagined goal.
Regardless of the obstacles and imperfections, great opportunities are usually well thought out. Which is to say, that someone or a team of someone is thinking through every aspect of realising the opportunity. They may not have all the answers for every challenge that must be met, but they are thinking about everything.
2. The future is built with today’s tools not tomorrow’s tools
The great innovations of tomorrow are usually built with today’s technologies in new combinations. You would be mistaken if you think true “invention” is the source of innovation or the typical great opportunity.
Many people seek a technological breakthrough or outright marvel as proof of the existence of opportunity. (And sure, sometimes break troughs and marvels are proof of opportunity), but many great opportunities are not driven by a breakthrough as much as a re-packaging or a better combination of advances. Apple’s iPhone is the migration of a friendly operating system onto a smart phone and the Apple iPod series is built from broadly available components.
For that matter, don’t focus your evaluation of an opportunity on what’s missing like the big technology step forward or novel process. Look at what is present today. Because the big breakthrough is rare, and you must focus on what’s present.
3. Appreciate the evolution of previous failures
Failed attempts at an idea are more a testament to the value of the idea rather than repudiation. In fact, most great opportunities aren’t realised on the first attempt of an idea’s execution but rather as the perfected evolution of previous failures.
When Youtube.com got going in the summer of 2005, it had no less than 30 comparable competitors. Failures in the video sharing website genre go back to ZoomCulture.com in the fall of 1999. YouTube perfected their formula by making videos easy to upload and discover; but more importantly, by allowing other websites to embed the videos, Youtube broke through to widespread distribution. And with wider distribution, Youtube became the winner.
eBay was one of dozens of online auction sites with comparable functionality in the late 1990’s but yet it was eBay who emerged to lead a massive new category. eBay succeeded by solving the initial buyer trust issue with a feedback system. That feedback system enabled eBay to succeed as the online auction leader over auction sites with arguably better technology. They perfected the model.
In order to fairly assess an opportunity, you must examine the causes of preceding failures. Early video websites failed, in large part, because people had limited bandwidth. If the underlying cause of failure isn’t applicable any longer, the idea may be poised to succeed.
4. Timing can be everything
The single most powerful question you must ask yourself about an opportunity related to timing. Is right now the right time for this idea? There are a lot of great ideas that don’t become great opportunities until the time is right for them.
Interacting socially online with people of common interests or social circles has succeeded repetitively. The current social networks are simply the most successful. The current social networks reached a point of critical mass, for example, when there was nearly ubiquitous Internet access AND widespread personal usage of the Internet. If most of your friends aren’t online frequently, a social network is of limited utility.
Facebook wasn’t the first social network and neither was MySpace. In 1996 an online site for a teen audience to create their own online space with email, music and status sharing was launched. It was called Myroom.com and…. it wasn’t the right time. The idea of a social network can probably trace itself back to the original computer bulletin boards. A major factor for Facebook success was the timing.
You will find analogous failures for every opportunity you ever consider deeply. If you can’t comprehend why they failed, you will be ill equipped to evaluate the modern day equivalent. But the truth is, thanks to accessibility of people and their stories, you usually can find something, somewhere wherein the founders detail those causes.
In your career, in order to do better on the final accounting of opportunities vs. recognition; you must first recognise the opportunities … and they don’t always show up gift wrapped. Taking these truths into account, you should have an improved ability to know ‘em when you see ‘em.