What You Know For Sure...

Big opportunities lying in plain sight

Making non-consensus or contrarian investments is painful. In hindsight, you look like a genius, but in the moment one can often look (borderline) irrational.

This week I did a look back into some of the bigger opportunities investors would have missed if they took market consensus views on a large incumbent’s strategy. Think Ford and “they’ll always own their supply chain” or Kodak and “they’ll always lead film photography.”

Reflecting on this begs the question…what big opportunities are we missing today by taking a consensus view on what a large player will do over the next 5-10 years?

Here’s a few examples from history, and the opportunities investors would have missed if they rested on the market consensus that the leader’s strategy would remain unchanged:

1. IBM

• Myth: "They’ll always dominate hardware manufacturing."

• What Changed: IBM sold its PC business to Lenovo in 2005 and shifted focus to software, services, and consulting.

• Missed Opportunities:

  • Cloud Computing: AWS, Microsoft Azure, Google Cloud.

  • Hardware Specialists: Lenovo became a global PC leader.

  • Enterprise SaaS Startups: Companies like Salesforce thrived in the void IBM left.

2. Kodak

• Myth: "They’ll always lead film photography."

• What Changed: Kodak failed to transition to digital photography, despite inventing the digital camera. They outsourced and spun off much of their core business.

• Missed Opportunities:

  • Digital Cameras: GoPro and smartphone ecosystems (e.g., Apple iPhone).

  • Photo Sharing Platforms: Instagram, Snap.

  • New Imaging Tech: Sony Imaging Sensors and AI-driven tools like Adobe's Creative Cloud.

3. AT&T

• Myth: "They’ll always own all telephone infrastructure."

• What Changed: After its breakup in 1984, AT&T divested local telephone operations and pivoted toward wireless and internet services.

• Missed Opportunities:

  • Wireless Carriers: Verizon and T-Mobile captured significant market share.

  • VoIP and Internet Communication: Skype, Zoom.

  • Fiber and Broadband Providers: Comcast, Google Fiber.

4. Microsoft

• Myth: "They’ll always dominate boxed software."

• What Changed: Microsoft shifted its focus to cloud computing and SaaS, launching Azure and Office 365.

• Missed Opportunities:

  • SaaS Revolution: Salesforce, Workday, Zoom.

  • Open Source Ecosystems: Red Hat thrived while Microsoft lagged initially.

  • Cloud-Native Companies: AWS, Google Cloud.

5. Ford

• Myth: "They’ll always own their supply chain."

• What Changed: Ford divested many vertically integrated operations and began outsourcing components to suppliers.

• Missed Opportunities:

  • EV Revolution: Tesla, Rivian, Lucid Motors.

  • Supply Chain Specialists: Magna, Valeo.

  • Mobility Startups: Uber, Lyft, Lime.