Way Too Early – On Market Timing

Market timing is a necessary (but not sufficient) condition for venture success.  Obvious, right?  The problem is that timing is obvious only in retrospect.  Predicting how markets will evolve is an art, and probably is the single most important job of a venture firm.  Boiled down to its essence, our role is to help companies create or disrupt markets.  Good market timing and strong execution lead to success.  Good market timing and mediocre execution can also lead to success.  But market mistiming leads to failure.  There are so many examples.  Don’t start a streaming video service until there is broadband.  Don’t start a mobile app company when the carriers control the deck.  I have a few specific examples to share.

I started a company called InterSense back in 1996.  We had a tracking system that was very smooth and fast, and accurate enough for augmented reality.  It is very difficult to nail an image to a real world object as you move around.  But InterSense could do it.  Nobody cared.  About a year ago, the world woke up to a modified version of augmented reality on smart phones.  So, we were 14 years early.  There are no InterSense millionaires around town.

In 2003 my firm put together the first investment round in a concept company called EnerNOC (Nasdaq ENOC).  The idea was to help facility owners save money by monetizing their ability to reduce power consumption during times of high power grid stress.  In a slow economy, this seemed like a good proposition.  But there was no demand response market back then.  We had to create it.  Right after our investment, two important things happened.  First, NYC went dark in a blackout.  Then, Al Gore introduced the world to global warming.  Suddenly, energy was sexy, the term “CleanTech” was coined, and we had  a very hot deal on our hands.

I was prompted to write this because I see now that Sony is planning to incorporate augmented reality into their next generation game machines.  Is it really time for augmented reality 14 years later?  Should we be seeking deals in the space?  Not so obvious is it.  Fortunately, I have my partners and my trusty Magic 8 Ball…

(Scott Johnson, New Atlantic Ventures)

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