It is human nature to look out to industry insiders to understand trends and the future. Be it in business, technology, markets, investing and our life, we are fascinated by the ‘expert’s view’ on the tomorrow.
Throughout history, the common aspect of growth has revolved around innovation. The concept of survival of the fittest has meant that we have constantly grown as a race. In this article, we look at some of the best industry minds and the role each played in ‘predicting the future’.
As Internet was evolving in the mid-90s, there were multiple business models that were growing around the Internet as the backbone. Robert Metcalfe (who many consider as the inventor of the Ethernet) spoke about his prediction around the same time talking about the collapse of the internet where he used the following words – ‘I predict the Internet will soon go spectacularly supernova and then catastrophically collapse’.
He had a very sound logic for making such a statement – which revolved around the storage capacity not being built to handle the growth of the internet alongside the security issues that resulted in open-sourcing content. While both were genuinely valid concerns at that time, what he did not foresee were multi-billion-dollar businesses being built around this, to solve the concerns he had.
In the mind of the Microsoft CEO, he was keen on being the software provider on the devices where his market share was growing. However, by being dismissive of the device, one of the key aspects of the iPhone’s growth he missed was the business model innovation. Apple had worked on their model of subsidizing their phones through the operators, they instead worked on recouping the money through the monthly cell phone bill.
From his perspective, the statement made a lot of sense, as up to 2003, consumers consumed audio through 45s, LPs, cassettes and finally CDs. The idea of an all-you-can-eat-music was not congruent with history and how the consumer patterns were. Moreover, there were subscription businesses at the point, who were not very good and did not have full catalogs.
From the mid-1970s, Oracle was the premier database provider. Cloud computing was a direct thread to its on-premise model. However, one of the aspects of being open-minded and experimental in nature was, he was able to correct his views over time. Today, the business has pivoted in its entirety by moving to the cloud and is one of the leaders in the space.
Be it industry insiders, experts, or CEOs close to an industry transition, we all get our predictions wrong, irrespective of how close we are to the data. This cannot be truer in the investing world, where we are meant to ‘predict’ on a weekly, quarterly and annual basis. The dangerous aspect of prediction, though it’s done with very little success, is it blinds us to the changes around us and keeps us rigid and away from reality.
Inherently, an investor adopting the philosophy of growth is moving away from the zone of prediction, but more to a domain of innovation. This has a natural aspect of innovation and being open-minded towards change. From the purview of an investor, over periods of time, this results in capturing significant upside while eliminating the aspect of prediction and movements of the markets.
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