Summary of Overall Concepts
Trends, Waves, Windows & Bubbles is a book about technology big waves.It’s the third in a series (the first two were Big Wave Surfing and Do Not Invent Buggy Whips ) looking at how technology moves from the research lab and into viable products. This book looks at how to spot, not necessarily create, a wave. For a variety of reasons, not everyone can create a disruptive technology wave. However, there is no reason that you cannot profit from waves created by others. If you can spot a wave, you can profit.
A classic example of a trend is Moore’s Law. Simply stated Moore’s Law says that the number of transistors on integrated circuits doubles every two years. A variation of this law says that speed and performance of a chip doubles approximately every 18 months.
The great investor Peter Lynch of Fidelity investments used to walk around shopping centers as a way to detect and understand new long-term trends in retailing and thus get new stock purchase ideas.
Consider the simple development of the transistor. The development of the transistor created a trend of developing and implementing smaller, denser, more powerful and more reliable electronic devices. The building blocks (transistors, integrated circuits, microprocessors and programmable logic arrays—to name a few developments of note) that form these devices came in waves of technology innovation. And, you did not (and even today do not) have to be a pioneer in the electronics business to “profit” from the waves of technology innovation spun out of the transistor revolution.
Like the general population, designers become creatures of habit and over time they tend to grow more and more conservative in their designs. It is a very rare designer that can change and succeed for more than a couple of design cycles and thus be a significant factor in multiple technology waves.
That is the problem with windows of opportunity. To succeed the timing must be right. You cannot be too early or too late. Either case is the kiss of death.
Even more interesting are situations when a company misses an opportunity, sees how big the opportunity is, and then tries to enter the market. One of the best examples of this was Microsoft who missed the initial Internet wave and has been trying for years to catch up.
Assuming that we are in the game, we face the Prophet/Doctor of Doom. Yes he exists and he is more than a comic book character. The stronger a trend, the bigger the wave (and the more spin-outs of trends and waves) and more windows of opportunity, the bigger the bubble will be.
Tulips, although they had less intrinsic value, had a similar situation from 1636-1637. It was considered to be the first recorded financial bubble. Speculators pushed Tulip bulb prices to record heights before they collapsed and plunged the Dutch economy into a severe crisis that lasted for many years.