There’s no chance [this device] is going to get any significant market share. — Steve Ballmer, Microsoft’s ex-CEO
There is nothing revolutionary or disruptive about this technology. — Padmasree Warrior, Motorola CTO
I don’t think [this device] is something that would… necessitate us changing our thinking. — Olli-Pekka Kallasvuo, Nokia CEO
Can you guess which device these executives are referring to?
Here’s a hint:
Despite the naysayers’ doubts, this piece of technology soon turned a struggling enterprise into one of the most valuable companies in the world.
Today I’ll reveal this mystery device…
I’ll explain why some of the smartest minds in technology got it so wrong…
And I’ll show you how their mistakes can make you a better investor.
Turn Back the Clocks
Ten years ago, in the summer of 2007, Apple unveiled a new piece of technology:
This device was ahead of its time. In fact, reviewers couldn’t even figure out how to describe it:
One journalist referred to it as a “computer with a blank screen that users configure so they can operate [it] with their fingers.”
Uhh … what?
At the time, I was obsessed with my BlackBerry. So were 10 million+ others.
Most of us shrugged our shoulders. We didn’t need a new device.
So how did the iPhone go from being doomed, to becoming a great success story?
Simple: technology evolved.
The quality of phone cameras soon surpassed the quality of our old point-and-shoots…
Data plans got bigger and better…
And with bigger, better data, now we could stream high-quality music and video.
Apple hadn’t necessarily been able to predict these technology innovations, but its iPhone was in the best position to take advantage of them.
And by taking advantage of them, the iPhone became a critical part of our lives — and helped add hundreds of billions of dollars to Apple’s market cap.
Meanwhile, former detractors of this device (including Microsoft, Nokia and Motorola) became less relevant and far less valuable. BlackBerry got crushed.
How did everyone miss this?
Nobody Knows Anything
It’s not that technology CEOs lack brains or aren’t paying attention…
It’s that predicting the future is very hard.
Who would have thought a phone would be able to replace everything from our camera and stereo, to our TV and computer?
But here’s the thing:
Predicting which products will catch on isn’t just hard for tech CEOs...
It’s also hard for early-stage investors like us!
For example, rewind the clock a few years:
Imagine I approach you about a start-up investment opportunity:
I tell you that, with just a single car and my mobile phone, I’m going to corner the market for taxis in San Francisco. And once I take San Francisco, I’m going to keep expanding until I own the global transportation market.
If you’re like most folks, you’d have passed. In fact, you probably would have thought it was a dumb idea.
But that “dumb” idea turned out to be Uber, a start-up that’s become one of the most successful companies (and investments) of all time.
Early private investors have already made an estimated 6,000x their money. That’s like turning $1,000 into $6 million — all from an idea that seemed doomed from the start.
So here’s the big lesson:
Nobody – nobody – has a crystal ball…
No one knows which company or product will become the next iPhone or Uber.
Unfortunately, as an early-stage investor, this puts you in an awkward position:
How do you know which companies to invest in? And which ones to pass on?
As long-time Crowdability readers already know, a couple of easy-to-follow strategies can help you become a more successful early-stage investor.
For starters, you need to diversify.
As you read about today, it’s hard to predict the future. So to put yourself in position to capture the next Apple or Uber, you need to make small bets on a large number of opportunities.
You also need to do your research! Research helps ensure you don’t dismiss an opportunity just because it seems farfetched or “dumb.”
For example, when evaluating any new early-stage investment opportunity, I consult the checklist from Crowdability’s “10 Commandments.”
Using this checklist, I evaluate whether a start-up meets such criteria as having a simple business model, strong founders, and signs of early progress.
These commandments might not offer you a crystal ball…
But they do provide you with valuable perspective.
In our free “10 Commandments” report, we explain these concepts in greater detail.
If you haven’t done so already, visit our Resources section and download your copy here »