Five Things You Need to Distinguish a “Fad” From a “Trend”

Sorting out trends can be tough.

Some patterns of consumer behavior aren’t trends at all, but merely “flash in the pan” fads.

Why is this important?

You don’t want to invest in short-lived fads.

You want to invest in trends – the bigger and longer-lasting, the better.

Most founders (except those copycat “me-too’ers”) think along these lines… but the most successful also do so earliest.

Hitching your wagon to trends that are both early and impactful increases the odds of a big payday down the road.

The Sound of Silence

As you might imagine, it’s hard to identify early trends if no one is talking about them.

A good example is Oculus Rift – the world’s first manufacturer of virtual reality headsets for video games. It became a Kickstarter star, raising $2.4 million from a passionate community of mostly gamers.

But this was 2012.  The buzz was relatively tame and short-lived. The VR technology – and how it could be used outside of video games – wasn’t seriously explored.

Trend or fad? I thought trend, but the sound of silence indicated that I was in the minority at the time.

Two years later, Facebook gobbled up Oculus for a cool $2 billion – an acquisition that generated some serious buzz…

But, once again, it didn’t last long.

In my view, the technology was still flying under the radar. I had hoped the Facebook acquisition would enable VR to evolve from an obscure and futuristic techno-fad to a significant trend to watch.

But, strangely, the buzz never reached into the mainstream press. Was I mistaken?

It’s pretty clear now that VR should take its place on the Mount Rushmore of trends to follow. My partner Adam and I have been saying this for quite a while.

Take a look at this article for more details. And here’s another good article on VR worth reading.

R.I.P. Google Glass: 2012-2014

As hard as it is to identify early trends if no one is talking about them, everybody talking about a technology or product doesn’t mean the trend is real or significant.

Getting good press may be a function of a company’s PR efforts or prestige factor. Take Google Glass, for example.

A couple of years ago, there was a huge buzz about Google Glass.

Instead of carrying a computer in your pocket, you’d be wearing it. The idea engendered a great deal of excitement. It seemed that a new technology was about to change our lives. And it was from Google!

How could it fail to take hold? Investors were hopeful.

So were founders. I remember at the time seeing at least a couple dozen startups spring up around the Google Glass technology.

Trend or fad?

We all know the answer to that one.

The glasses were dorky-looking. They freaked other people out. Were they recording you? Giving users your personal vitals? Privacy became a big concern.

The hype was strictly a media creation. We know that now. But at the time, it wasn’t so obvious.

So how do you tell trend from fad in real time?

Well, if Google Glass truly represented a trend, it would have had to achieve these five things…

  • Address a need or create one by doing something much better. Google Glass thought its “handless” computer was a dramatic improvement over the smartphone. But even smartphones – hidden in one’s pocket (or pocketbook) half the time – had to be stylish. Glass was something you put on your face, for goodness sake.

    Yet, amazingly, its looks were ignored.

    Lesson taught: “Better” means function and style.

    Lesson learned: Tesla gets top grades for combining high-end design with function.

  • Solve a big problem. Hospitals were going to be one of the first main users. Doctors could access information while examining patients – just one of many examples of how it would bring new efficiencies to hospitals and clinics. It was assumed other industries would follow.

    Glass was tried in targeted hospitals and generally given good grades. But these small victories didn’t come close to matching the hype.

    Lesson taught: Niche use doesn’t rise to the level of “big.”

    Lesson learned: Adaptive Biotechnologies takes advantage of advances in DNA sequencing to develop breakthroughs in infectious diseases, including cancer. Nothing small or niche about these applications.

  • Save consumers significant amounts of money, time or convenience… or preferably all three. Glass was going to be more expensive than smartphones, so nix the savings. It wasn’t going to free up loads of time either. Which leaves convenience. Yes, it was a step up to pulling your phone in and out of your pocket all the time… but a smartwatch almost achieves the same level of convenience and with the “cool” factor that Glass lacked. Not nearly enough here.

    Lesson taught: Exciting technology doesn’t always translate to an upgrade in user experience.

    Lesson learned: Uber scores big on all three counts.

  • Have a passionate community of users. I read the blogs of dozens of early users. A small number loved Glass. Most cited major drawbacks.

    Lesson taught: If the early adopters don’t like you, you’re in trouble.

    Lesson learned: Virtuix, a VR startup, has generated an avalanche of praise from early users, including the founder of Oculus. Its Omni platform enables players to run and jump as the VR game mimics their movements.

    [Note: Virtuix is a recently added holding of Startup Investor, a service reserved for our premium members.]

  • Establish a clear path beyond the initial passionate group of early adopters. Google Glass didn’t get this far – no path within sight.

    Lesson taught: Technology has to spread beyond the group of early adopters to have a major impact. Did Google have a plan? We’ll never know.

    Lesson learned: Facebook’s Mark Zuckerberg went from serving his fellow students at Harvard to serving students at other universities to gain traction. Facebook used that momentum to reach the general population.

Riding a big trend doesn’t guarantee success. But without it, startups can only grow so big – if they grow at all.

So there you have it – the five indicators early-stage investors should know to identify startups riding real and potentially game-changing trends.

Trend spotting – even this early – shouldn’t be a guessing game.

Invest early and well,

Andrew Gordon

Founder, Early Investing