There are many enormous companies around the world which emerged from relative obscurity to dominate their markets and become household names. We have the likes of Apple, Google, eBay and Amazon to name but a few. These are companies which were often ridiculed, dismissed but they came back stronger than before and eventually made it into the big league. There are very few markets around the world which do not have at least one dominant player which is very often at loggerheads with governments and regulators.
So, will we ever see stories similar to Apple and Google again or have those days left us forever?
Mighty oaks from small acorns
Every few years something monumental happens in the world of business which surprises people, makes people stand up and listen and can change the world we live in. While many of us have grown up with the likes of Apple and Google who would have guessed that the electronic cigarette industry would be challenging the tobacco market after many false dawns? The electronic cigarette market is forecast to be worth $2 billion in the US alone during 2017 and despite regulatory hurdles and political interference is still showing very impressive growth.
Markets always looking for new ideas
The electronic cigarette industry came from nowhere to become a multibillion dollar sector in just a few years. There is an array of pharmaceutical minnows working on potentially groundbreaking treatments today who could become the Pfizer’s of tomorrow. Many experts believe that artificial intelligence could be the next growth sector and there is no doubt that many companies are investing billions of dollars into this technology. There has also been heavy investment in electric cars over the last few years and there is no doubt this has changed the landscape of the traditional gasoline vehicle market.
It is sometimes difficult to see the emergence of new ideas because our minds are often conditioned to think “a Google story will never happen again”. The fact is that Google came from nowhere to take out Yahoo and Microsoft which had made a mess of the search engine market. There was a small gap, there was a short time scale, and Google certainly took advantage.
Risk reward ratio
We look back at the share price performance of companies such as Google and Apple over the last 20 years or so and think to ourselves “it was obvious with hindsight”. Hindsight is a beautiful thing but sometimes it is possible to spot a group of companies which could make it big in the future. While there is often a temptation to put all of your money on the “house” the more sensible way forward is to spread the risk across a group of growth companies and hope that at least one makes it to the big time.
If you are lucky enough to spot a company which becomes the giant of tomorrow the next big challenge is to hold your nerve. Do you sell up when you double your money, triple your money or do you get your initial stake back and run the balance of your investment at zero cost? It is difficult enough to find these companies but the greatest challenge for many investors might be holding their nerve so they can maximise their returns.