With so much rapid change in business, technology, and society, how do you decide where to place bets (and what to avoid)? As the head of a venture studio at the forefront of global impact, this question is always top of mind.

This is part one in a two-part series. In this article, I’ll introduce three lenses I use to look at investment decisions. Part two will cover three specific areas of interest.

Lens 1: Converging Technologies And Trends

The world is about to face five to 10 major paradigm shifts, each as revolutionary as the rise of the internet — but moving much faster and all colliding in the next decade or two.

This “age of innovative destruction,” defined by high-speed change and continual disruption, will be won by those bold enough to pursue big and meaningful goals while constantly looking beyond the horizon and adapting as needed.

Investors must weigh the implications of emerging technologies and movements — and not in isolation, but as part of a dynamic and evolving web. Cryptocurrencies, blockchain, machine learning, natural language and other areas of innovation are individually fascinating, but they’re collectively transformational.

Consider the convergence of natural language processing, augmented and virtual reality and translation technologies. Together, these hold tremendous potential in many areas.

One use case is giving on-site guidance for complex maintenance tasks in construction and engineering: no need for a clumsy manual when a combination of natural language and visual recognition can walk you through the process.

Look for companies and leaders who understand where technologies like these are most applicable and what opportunities they offer, not just for one product, but across an ecosystem of high-value innovation.

This can give you a great starting point. However, it’s important to examine not only the promise of technology, but also the actual value being generated.

Lens 2: Real-World Value And Right-Sized Funding

It’s tempting to get excited about technologies and decide to invest in, for example, a machine-learning company or a blockchain company.

The question, however, must always be, “What’s the purpose?”

Consider not only what problems it will solve for people, but how it will enhance what’s already going well in their lives.

Much of the startup world focuses on benefiting investors in the short term without solving any meaningful problems. Many venture capitalists expect four of every five companies they fund (or more) to fail, and they’re fine with that, as long as one unicorn gives them an enormous return.

This “unicorn-or-bust” mentality is a high-risk, low-reward approach that wastes resources and leaves a lot of opportunity on the table.

Potentially great companies are either ignored because they don’t appear scalable enough or ruined by overfunding. Many companies on the latter path get priced out of their most-likely early exit, yet it takes years to find out if they’re even viable.

This is why Silicon Valley has for years been filled with expensive failures, like:

Color (2012, $41 million raised).

Juicero (2017, $120 million raised).

Jawbone (2017, $900 million raised).

Despite a year of record venture spending and public debuts, the notion that investors should only be concerned with a profitable exit is tragic for the long-term health of the economy because, as it always does, the music is going to stop.

In our studio, we favor value overvaluation.

We’re not interested in technology for technology's sake or meaningless profit.

Companies are conceived in the interest of creating great customer experiences and making the world better. We’re also ruthless about applying lean principles to de-risk our companies before seeking major investments.

The most successful entrepreneurs and investors in the coming years will be those who understand it's best to do something that matters and run a lean machine along the way.

Where do I look for these opportunities? The answer is...everywhere.

Lens 3: Diversity And Democratization

The world is on the verge of an explosion of entrepreneurship, and investors should be extending their gaze beyond the default zip codes.

A wave of great ideas and companies is emerging from all corners of society and the globe, and it’s only growing.

Yet venture capital remains a fairly closed system. Many VCs recognize it’s not working for the majority of people and limiting their own opportunities, yet they struggle to expand the pool of talent and innovation sources they fund.

Of the record $137 billion funneled into U.S. startups in the first half of 2021, black and women-only founded companies received less than 2% each.

North America has always had a supersized level of venture funding compared to the rest of the world, and most of that is restricted to California, New York, and Massachusetts.

This means that 99% of the world’s talent and creativity remains neglected.

The rise in entrepreneurship is driven by a combination of frustration with this exclusion and breakthroughs making it possible for anyone to conceive, fund, and grow businesses.

Technology advances like no-code/low-code accelerate and reduce the costs of product development while blockchain-powered sources of capital allow anyone to fund their ideas.

As a result, the barriers to entry in business are falling rapidly toward zero, and the power is shifting into the hands of creators and entrepreneurs.

This revolution means investors must look outside their comfort zones, embrace democratization, and venture into bold new directions.

These are a few of the top lenses we use in our studio to consider new opportunities. If they resonate, feel free to adopt them. If not, consider what’s most important to you in making investment decisions and look for opportunities that match your values.

Mark S. McNally is the founder and chief nobody of Nobody Studios, a globally distributed high-velocity venture studio bringing together investors, founders, and creatives to forge companies with purpose, real-world value, and a human connection. For more information, visit www.nobodystudios.com.

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