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Comment by mobiletelephone | Hacker News Reader

That quote stood out to me too. My question is, if there is a new capability (Bitcoin is a good example) then how do you invest in that capability? Sure you can pick a company working on some application, but they will almost certainly miss the real value of the capability.

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Missing real value can be the same as showing potential value. If you have conviction there is real value, then you're banking on many misses, some capturing most of it and a fewer number using it to it's potential. From there things like commoditization come into play. However, you should be mindful of tying capability to value, just because something is capable does not also mean it must be adopted as valuable. Plenty of things that are not particularly capable are overvalued, and many things that are incredibly capable are under valued. I think the important part to look at is does this capability accessibility solve very many problems. If so, then you can start to think about a few solutions, but it isn't meaningful to try and understand all the applications of the solutions (because you typically don't understand that abstract customer). Cloud is a good example of this.

"how do you invest in that capability?"

It's not clear to me that you can. How would you have invested in air travel in the time of the Wright brothers? None of the companies that eventually came to dominate existed then.

I think in this light you either invest in an inventor or radical innovator, or a component of their supply chain. One is: I'm going to make this happen and all these things will happen, the other is: this thing is happening so we should should to these things. This is why the path from venture (paradigm shift) to public (shifted) is important, the best public companies indicate a fundamental in other businesses, they are enablers. However, over time you become a commodity item on a supply chain and run risk the "enabled" companies will out innovating you as they build their capabilities and margins .

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