originally posted by: audubon
Yes, you take a risk, and it is called a risk because you are not guaranteed to win. This is actually confirmation of the point you are trying to
disprove.
If you only bet on certainties, the world's economy would be based on the game of 'dead pool' rather than on stock markets.
Yes, only bet on certainties.
There's actually a book on this, (I read many years ago, can't recall the name at the moment), which did a study and showed what it took to be
successful.
The key thing was to avoid the risks, other people take, but to watch what they do and wait for the right time to jump in and profit from their ideas,
once the ideas have become accepted by the public.
The thing is, when you stick your neck out, to invent or create anything entirely new, that comes with great risk. Because you don't know whether your
new gadget or service will be accepted and wanted by people. Even if you believe that it will one day succeed, you can't determine "when." You then
have "to educate" the potential buyers, on why they should buy your product. This is where the "failure" occurs. It takes too much time to educate
people on something that's too new, while your bills pile up, and the venture collapses.
So, the very first law of success is to "avoid the risk" of being "the innovator."
Instead, wait until people have learnt that the new gadget or service is useful in their lives. Let the "risk takers" do all the educating for you.
And once you see the sales start happening, then, with that "innovation risk" out of the way, jump in and sell a very similar product or service at a
discount. That's where all studies show the real money is made. After the initial risk is out of the way.
You want to get in early, after "innovation risk" is gone, but before everybody else gets the same idea to compete, and the profit margins shrink
through intense competition.
So, all business ideas go through a certain cycle, from the initial innovation, through copycats, to finally stage where the gadget or service becomes
a "commodity", with very slim margins, and only the biggest survive.
The biggest profit, comes in being the first copycat.
It has no risk, since the "innovation risk" is out of the way, and people already know they need or want this thing. And it has little "competition
risk", since the initial innovator is on the point of "failing", and the other copycats haven't moved fast enough to enter the arena, so you get to
establish your business venture at the "right time" when the risks are the least, and your profits soar.
The corollary to this, is to look and see what has been successful in developed markets, and introduce those same products into less well developed
markets, where they don't yet exist. Again, removing the most important risk, which concerns the "adoption" of the tech or service by people.
That was the essential message of the study done on when and why and how business get to be successful.
You see all the innovations out there, and "assume" that it's a result of all the "risk takers". But, what most people don't know is that the "risk
takers" fail, and pass their best ideas off on to the "smart investors" who take no risk, but just "harvest" and "consume" the outputs of the real
risk takers.
Best way to success, take no risk.