One basic premise of the stock market surrounds the idea of early investment in business ventures which have the potential to grow and attract a wide user-base. It is a mutual goal of public and private investors alike.
While governments regularly subsidize research in medical advancements, energy, or national security; businesses might opt to invest in household goods. Since these expensive projects don’t always deliver a profit, what makes something worth investing in?
When investors are exploring growth potential of technology, the first part is to identify what need this will fulfill. Historically, when there has been leaps in technological advancement, it tends to fall into the following categories: Communication, Travel, Commerce, Recreation, Health, and Intelligence.
These groups give a rough idea of where the expansion and evolution of technology will always be required – and therefore, worth the development. It’s therefore important to understand the meaning behind these broad categories:
Communication: Anything from the telegraph to Twitter. Even Tinder and Yelp are included since they aid the facilitation of human connection and interaction.
Travel: Planes, trains, and automobiles; Uber to Trivago – these devices can help you get where you’re going.
Commerce: Trading, transactions, and transportation of goods. This is everything from Paypal to Bitcoin, QVC television shopping to Amazon, new shipping freight ships to FedEx.
Recreation: The primary function of this category is anything you might do to occupy your free-time for fun. Everything from hula-hoops and jump ropes to Netflix and Virtual Reality gaming.
Health: Defibrillators to MRIs. This technology directly applies to wellbeing.
Intelligence: This might be government surveillance, artificial intelligence, or search apps such as Google Maps. This technology can be the facial recognition software used by Snapchat, or the algorithms used to predict turns on the NASDAQ.
So, when investors are looking for “the next BIG thing”, how easy is it to predict a future no one can see? The truth is, it’s not.
Part of the problem may be that as tech companies are always competing to be the first one to release the latest product, inevitably meaning launching products before they’re fully developed. As these products are riddled with glitches, they fail to sell. Businesses pay the price when their premature products can’t generate enough revenue to cover expenses.
A good example of this might be the launch of some of Google’s more high-profile early-releases such as the self-driving car prototype, Waymo (2009) or Google Glass (2012). They were panned for clunky design, health risks, and lack of practicality.
Waymo’s self-driving car was – and remains – hotly anticipated, yet it still faces numerous hurdles. Although these prototypes were able to self-navigate, they could only drive at lower speeds because of slower reaction times and had difficulty measuring small distance differences, thus creating safety concerns. Yet, for practical reasons, they can’t navigate car washes or drive-throughs, and would require a driver behind the wheel at all times for safety.
As for Google Glass, it was largely promoted as a finished product. Those who purchased the Explorer for about £1,000 – comprised of mostly journalists and tech fanatics- were expecting something straight out of a James Bond novel. In reality, users complained of being overcharged beta-testers for a product which didn’t fulfill expectations. Although Google Glass received an overwhelming amount of press following Google’s initial release – being shown on celebrities, catwalks, and daytime talk shows – the amount of attention it received set the Glass up for failure.
Google Glass failed because of its design. Instead of making life easier, it presented new concerns for health, safety, and privacy. Since its initially release, there have been new reports alleging that Google Glass’ wireless radiation may be linked to cancer risks in users. There are wide fears that using the Google Glass may be unsafe while walking and could cause eye-damage from close screen-use. Finally, since Google Glass could record POV footage discreetly, it also offered privacy concerns from non-users.
Conceptually, Waymo and the Google Glass have the potential to be great: aiding travel, communication, and recreation. However, the biggest obstacle was their practicality. Users crave convenience within a sleek design, and these products only added barriers, thereby rendering them ineffective.
In contrast, some wonderful examples of technology which have flourished and evolved to fulfill various different needs might be facial recognition or online shopping.
Although facial recognition technology is used for government verification at borders and security footage, many use it on a daily basis. Sites like Facebook’s suggested tagging or Snapchat’s filters.
Investment in facial recognition is a prime example of developing a technology that can be marketed in both the public and private sector, appeal to a large base of consumers, and wide applications for further extensions. It operates as intelligence, communication, and recreation. It hasn’t been pigeonholed into only one function and therefore can evolve.
Consider how Amazon is leading example of online shopping. Although it began as a bookseller, it has since capitalized as a website of many trades: groceries, furniture, clothing, videos (with original content), music, and electronics. It’s been allowed to expand on the premise of accessibility and instant gratification.
As a result of the online-shopping boom, department stores have become a dying industry. On the internet, you can specialize what products you want, customize, and compare prices while in your pajamas! It is an improved experience. The e-commerce market fulfills the human desire for convenience and control. For the first time, the consumer- rather than a department store- holds the power.
There is no question that throughout history, we have evolved as a society, shaped by our technological advances. We have cured diseases, bridged communication barriers, and explored our solar system. Even commercially, Gen Z has been collectively shaped by the presence of social media and electronic devices in a way previous generations haven’t. So, why do we invest in inventions? I think it’s because we have collectively decided that by developing these devices, we are investing in a better future.