Inventing the Next Big Thing

Over the last several decades, we have witnessed groundbreaking technological innovations that underpinned market leading companies. These companies were initially envisioned by teams of technologist who have a vision for the future along with the capabilities to make their vision a reality. What were the commonalities of these companies? Is there anything the next generation can learn from these companies? We believe that there are lessons that can be learned from how these companies were conceptualized, developed, launched and ultimately scaled. Ideally, these same steps can be considered as the up and coming inventors seek to develop the next big thing.

In 1980, Bill Gates and Paul Allen founded Microsoft on April 4th, 1975 in Albuquerque, NM. Microsoft became successful by developing the Windows operating system for personal computers. Following this initial product development, Microsoft also developed a suite of productivity tools - Microsoft Word, Microsoft Excel, and Microsoft PowerPoint, an internet browser - Internet Explorer, and a video game system - Xbox. The success of their initial operating system along with their subsequent product offerings has led to dominance in their industry for the last 40 years.

Read more about the origins and history of Microsoft here. 

In 1976, Steve Jobs and Steve Wozniak founded Apple computers. They were focused on designing and developing a personal computer. After the initial success of the Macintosh line of computers, Apple went on to develop additional hardware products (iPhone, iPad, Apple TV, Apple Watch) and software solutions (iTunes, iCloud). Apple products have dominated the personal device marketplace over the past several years and enjoy tremendous brand loyalty.

Read more about the origins and history of Apple here.

In 1994, Jeff Bezos founded Amazon. Amazon initially started off as an online bookstore but has since expanded to offer video downloads/streaming, MP3 downloads/streaming, audiobook downloads/streaming, software, video games, electronics, apparel, furniture, food, toys and jewelry. Amazon also design and develops its own hardware products including: Kindle e-readers, Fire Tablets, Fire TV and Echo. In recent years, Amazon has developed a cloud computing business that has grown rapidly and is now the world’s largest cloud infrastructure provider.

Read more about the origins and history of Amazon here.

In 1998, Larry Page and Sergey Brin co-founded Google. Google was originally organized around the concept of search technology. Consumers would visit Google to search for a type of website they were looking for. Google provided superior results which allowed them to build a search advertising business around this solution. In subsequent years, Google has expanded the business into cloud computing, software (Google Maps, Google Docs, Google Email – Gmail, YouTube, Chrome, and Google Drive) and hardware (Google Pixel, Google Home). Google dominates the online advertising space and is famous as a company for investing in moonshots (self-driving vehicles) through their Google X labs.

Read more about the origins and history of Google here.

In 2004, Mark Zuckerberg, Eduardo Saverin, Andrew McCollum, Chris Hughes and Dustin Moskozitz co-founded Facebook from a dorm room at Harvard University. Facebook was originally designed to be a social networking tool for students at colleges and universities. Over time, it has grown to be one of the most popular social networking companies of all time with billions of active users visiting the web/mobile version of the site each month. Similar to Google, Facebook monetizes their utility through online advertising. They have also expanded into additional hardware (virtual reality – Oculus) and software products (Instagram).

Read more about the origins and history of Facebook here.

In 2009, an anonymous person or group of persons using the name Satoshi Nakamoto launched an open-source, peer to peer, decentralized software named Bitcoin. Bitcoin is considered to be the first digital currency. There are two key elements to Bitcoin: (1) mining of the bitcoin to create the overall infrastructure and (2) the ability to use the digital currency as payment for goods and services. Over the past several years, the value of Bitcoin has dramatically increased in value. As of this writing, the value of a single Bitcoin is $18,940 – 2,300% increase in 2017 which gives it a market capitalization of greater than $315,000,000,000 US dollars. The value of Bitcoin and cryptocurrencies varies quite a bit with wild swings in value on a daily, weekly, and monthly basis. There is also concern among some that due to the rapid rise in value that Bitcoin is going to be one of the biggest bubbles in modern history. While that remains to be seen, it is hard to argue that the underlying blockchain technology does not have tremendous application in a wide variety of industries.

Read more about the origins and history of Bitcoin here.

Now that we have introduced a few of the groundbreaking companies that have come into dominance over the past 40 years, what are we able to learn from how these companies are founded and have grown to prepare ourselves for the invention of the next big innovation.

As we see from the origin stories of these companies and technologies, with the exception of Amazon, it wasn’t just a single genius sitting alone in a room coming up with an idea for what she thought would make an impact on the world. Co-founders can help vet idea, share the development workload, and collectively help develop more efficient solutions than individuals. In fact, some of the most popular incubators (YCombinator, Techstars) prefer teams to individuals.

The companies highlighted above didn’t start out as multi-billion dollar companies that completely dominated their respective industries. Instead they focused on a small niche – operating system: Microsoft, personal computer: Apple, internet search: Google, books: Amazon, social networking: Facebook and decentralized payment system: Bitcoin.  Over time, it became clear that these companies had placed wise bets on how the market would develop in the future. But, in the early days they identified a niche and became better and better at serving their customers. It was much easier for Facebook to figure out how to make a few hundred Harvard students happy than their gigantic task of keeping billions of users happy. However, without first figuring out how to keep the small group happy would have limited their ability to every have an opportunity to keep the large group happy.

While these companies and technologies have come to dominate their respective industries, they are also utilizing some very innovation solutions. If you look at the annual patent filings from these companies, it is filled with unique technology based solutions that meet their customer needs. In addition, these companies hire lots of engineers on an annual basis. In January 2016, Microsoft gave a brief overview of their patent portfolio (59,000 US and international patents granted & 36,000 patents pending) and annual investment ($11.4 billion) in research & development. This confirms that these companies see that there is a competitive advantage to investing and protecting their technology-based intellectual property.

The companies that we gave snapshots of above started out in one area of expertise but have continued to expand and develop additional tech-based solutions. For example, it wasn’t obvious that Apple would go from dominating the personal computer market and ultimately transition into leadership in the personal device (iPhone, iPad) category. However, by having the core capability of being able to develop hardware / software solutions using technology; this enabled Apple to develop solutions that customers wanted. Another example is that Facebook which developed leadership in social networking now owns a virtual reality company. There isn’t a lot of overlap between the two unless you deconstruct the technologies down to their base layer which is solution development and have a faculty with building with technology.

Although the companies we’ve discussed started within a niche, they weren’t intimidated by their growing scale and global dominance. One of the best examples of this forward looking and forward thinking is Google’s Moonshots division. This team is tasked with thinking several years out and working their way back to develop solutions which have a high degree of technical risk but if successful will have a major impact on society. Over time, what has often been found is that it takes just as much effort to build a small solution as a big solution. So, one may as well think about how they might develop a solution that could potentially impact thousands, millions or billions of people – clean water, poverty, cancer, disease. There are many different solutions which will be enabled by technology through either data analysis or direct development.