Why Startups Shouldn’t Bet Big On Trends Like ChatGPT

by Lindsey Francy Feb 6, 2023 News
Why Startups Shouldn’t Bet Big On Trends Like ChatGPT
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Joe Procopio has been in the tech industry for 20 years and has multiple exits. He is the Chief Product Officer at Spiffy, a mobile vehicle maintenance startup, as well as the founder of Teaching Startup. He writes a column for Inc.

I thought I would revisit and update one of my early posts about startup trying to cash in on trends.

This wasn't one of my most read posts back then. I would like to see more people read it.

I would like to speak to you trend-chasers and big-thinkers. I want you to avoid the mistakes I have made and I want you to see others making them.

It's a good idea to keep an eye on those trends.

I have called for the rise of X and the fall of Z before. It is a common call to make, driven by a special kind of human nature baked into the heart of everyentrepreneur.

The drive to find the next new thing is what motivates us and challenges us to solve problems that aren't our own.

Sometimes we bet everything on a mirage.

When is a bubble a bubble?

Videoconferencing, home delivery, and eServices were some of the major market bubbles that were inflated by the swine flu. There were a lot of small trend bubbles around the big market bubbles.

I didn't make that up.

There are market bubbles. Economic shifts start small, grow quickly, and then explode into the mainstream. Every startup that fits into the category of disrupting, evolutionary, or game changing rides that economic wave to reward.

It is not luck that propels these startups forward. The reason that Zoom is a household name is because they were in the right place at the right time before the economic shift hit the mainstream.

It is dependent on the situation. Is it possible that Microsoft, Apple, and other companies want to have zoom? It's probably not.

When is a bubble dangerous?

Two years ago, I received an article about bubbles and trends from a friend. The article was a piece of content marketing, but it had a list of assumptions that you would need to make in order to believe certain economic shifts would become permanent.

Two years ago I thought they were realistic. Your order of most realistic to least realistic could be different.

  • Video conferencing will replace in-person meetings.
  • Digital workout platforms will replace gyms.
  • Home sharing will replace the hotel industry.
  • Electric vehicles will eliminate internal combustion engines.
  • Food delivery will fundamentally alter consumption patterns.
  • Digital currency will replace the U.S. dollar as the dominant currency.
  • Ride sharing will eliminate the need for personal vehicles.
  • Autonomous driving will replace human drivers.

Only a few of these have come true in the two years since. I might put electric vehicles at the top if there was a change.

When I look at this list, I want to change it. That is the catch of the bubble All of these things could happen, and they could happen more or less than industry upheaval.

There are still newspapers, but not many 3D TVs. We have a videophone, but I don't have a flying car.

All of them are high risk bets. Do you want to risk a lot on a flier bet?

When is a bubble an opportunity?

We have all seen those projections. Two years ago, when I was doing some research, I found this quote.

The world's 5G consumer market is expected to be worth $32 trillion by the year 2030.

I don't know what that means. I know what a consumer market is but I don't know what 5G is. A small portion of those 5G consumers could be captured by an entrepreneurial.

There is a big number of the left. We can make $30 million if we sell to less than 1% of the market.

We are executing a plan built on some of these types of total addressable market discussions, but more specific to our industry and our sector, where some just-as-grand changes are invoked. The scale can produce numbers with lots of zeroes which are loved by investors and C-level executives.

Entrepreneurs do it. Market haystacks are where we look for opportunities.

Why are bubbles attractive?

Do you know how small that is? Yes, but when you apply it against a market of trillions of dollars, it's still not doable.

We live in a time when we have seen some of those economic shifts take hold fast.

Everyone has a computer in their pocket 10 years after the launch of the iPhone. It took your grandmother a long time to join the social networking site. When we get a bit of buffering in our streaming, we get really angry and it only took about 10 years for netflix to go from a 2 day wait for a movie to arrive at our homes

We shouldn't be looking for bubbles.

Every billion-dollar story needs a catalyst

Two years ago, I wrote a post about the five things investors need to know before investing in a product. They need to answer the last question about the catalyst. They will place a high-risk bet on an economic shift that may be a bubble.

It is necessary for startup growth to have catalysts. Some catalysts are better than others. Smaller catalysts are more lucrative to chase than larger ones.

The catalyst doesn't make a startup successful. A trend can be pursued by anyone. The startup responds to the catalyst in a different way.

There is more than one ride on that wave. Our startup has been running for 8 years. The market effects of a catalyst grab hold and push are what keep a company in business.

I owned two of the connected devices before the Apple device. The foundation of the mobile infrastructure came online in the 1980s, 20 years before the launch of the iPhone.

It took Amazon 20 years to get to where they are today, and they have made a lot of different changes along the way. For example, Amazon Web Services. This is planning.

When someone tells you that they will write all the content, don't believe it. It will take a long time and a plan to exploit any single economic shift to be the winner. Make sure the decisions you make are in line with the risks.

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