As we head towards the second half of this decade, what will be the next big thing? To predict that, let's take a look at the previous decade and what emerged from it.
In 2000, the dotcom boom burst with a resounding crash, ending a feverish few years. In the late 1990s, it seemed like you couldn't swing a cat without hitting a Harvard dropout who was hiring expensive PR firms and throwing lavish launch parties for his online donut-delivery service. Venture capitalists went crazy and companies with no profits, or real business models, were valued at outrageous prices based on hype. (Remember TheGlobe.com, which set a record with its IPO valued at $842 million? Neither do most people.)
I think the lessons of the dotcom crash have a lot to tell us about building tomorrow's billion-dollar businesses:
Don't lose sight of what people actually want. Pets.com is perhaps the biggest example of this: the dotcom sold pet supplies online for delivery, but didn't take into account that there wasn't actually a whole lot of demand for pet supplies to be delivered. People were perfectly happy going to the store to get them.
Today, some companies seem to be making the same mistake. New York magazine recently wrote about the Silicon Valley race to create better laundry apps—something few people outside of Silicon Valley tech workers really care about. And the recent reveal of the Apple watch met with a healthy dose of derision: Does anyone really need a smartphone strapped to their wrist in addition to the one in their pockets or purse?
Don't get too big too fast. It cost a lot more money to start a website or ecommerce business in 2000 - hundreds of thousands of dollars, as opposed to hundreds of dollars today. Growing companies had to tap into investors who demanded huge returns and rapid growth. As a result, many companies scaled before they were ready to sustain that size.
Today, it's a lot easier to start a small website, test what works and what doesn't, and then grow. You don't need VC support to launch a website and grow it—you can quite easily start from your spare bedroom.
Being the first mover isn't always an advantage. Ironically, many of the companies that flamed out during the dotcom crash sound quite sensible to us now. Kozmo.com, which delivered anything and everything with no minimum, sounds a lot like Amazon Prime. But doing an idea first isn't the same as doing it best.
Today, smart companies learn from the mistakes of those who go before them. Consider how Facebook learned clean lines from the clutter of MySpace, or Uber learned from the struggles of Zipcar. There's nothing wrong with waiting and watching, then leaping in to provide what the market leaders don't.
So what will be the billion-dollar idea of the next decade? It will probably look nothing like the hot ideas of today (think about what ideas were red hot 10 years ago), but here are some predictions:
- Technology: No doubt the billion-dollar ideas of the future will continue to involve technology. Mobile applications, wearable technology and "smart" devices are all burgeoning areas poised to get even bigger. However, online data storage and security are the "behind-the-scenes" industries that will make increased use of mobile, wearable and smart technology possible.
- Sharing economy/Marketplace: With the economy permanently transformed by globalization, technology and recession, companies that provide marketplaces for individuals to profit from selling or trading what they already own are likely to grow. Consider the buzz about Airbnb, Uber, TaskRabbit and other sharing-economy businesses.
- Omnichannel: Ecommerce pure plays were hot before the dotcom crash, but today it's all about omnichannel. Consumers are way more comfortable shopping online, but for many products, they still want to touch, test and see the items IRL (that's "in real life") before they buy. No wonder ecommerce companies that started online like Warby Parker and Rent the Runway are opening brick-and-mortar locations. Adding a physical store that carries limited-edition, real-world-only or otherwise "special" merchandise can be a great way to grow.