Spotting Technology Winners is a Judgment Call

Forbes’ brilliant technology analyst and venture cap investor Josh Wolfe gives as a clue on how to identify winning technology innovation, (bold caps original)

And the stakes are always highest when the forces of technological disruption, oft too weak to be detected, catalyze massive industry change and become too strong to be resisted.

Common conception holds that brilliant inventions burst straight from research labs to take over markets. But in studying and investing in change, it becomes apparent that the enabling technologies have often been in existence for some time, developing quietly in the background in ancillary markets or other incarnations. It’s only at the confluence of parallel technological developments and shifting market forces that, often unexpectedly, “Aha!” – a new application takes hold. The combinatorial chemistry of industry and invention yields an explosive reaction, and then: everything changes. Thus we’re always hunting for two things: cutting-edge technologies and rapidly changing markets.

In short, the success of identifying winning disruptive technology innovators comes with the ‘right timing’. Technology may have been "in existence for some time", but markets may not be ripe for it.

This gives merit to Professor Peter Klein’s definition of entrepreneurship as one of speculative judgment.

At the Mises Blog Professor Salerno writes,

So, Klein maintained, the profit opportunity was not an ex ante fact waiting to be discovered; rather the profit opportunity was only realized , ex post, as the successful outcome of an action based on a speculative judgment. Whether or not the plans of economic agents are better coordinated and the economy is closer to equilibrium than before is “irrelevant,” Klein explained; the important point is that ex post profits indicate that resources have been reallocated from less valuable to more valuable uses from the point of view of consumers.

Anyway, Mr. Wolfe’s present candidate is the 3D printer.

I talked about the potentials of 3D printers at an earlier post.

I also share the view that 3D printers will function as one of the three major forces of the information age.