If you're an investor, there are two basic industry traits that you should look for:
1. Big marketBoring?
I've been an investor in many business, of which some have been of the oh-so-cool kind: Yachting, sports equipment, fashion, electronic games...
And then I've been involved in the bugger-how-boring kind: Pulp and paper, cans (yep, the fish and paint containers)...
From my many years in business I learned one thing about this dichotomy:
Cool and sexy industries attracts a steady flow of new entries, players and investors. A kind of margin influx of money that is willing to be lost and people that are in it for the wrong reason. That makes it extremely hard to earn money, if anything at all.
Boring industries are the completely opposite, the people involved stays and know what they do, the influx of new entries and money is at most a trickle. Margins are stable.
So if you want to earn money, find a boring industry!
And now I'm in software. There you have two kinds:
Consumer software: The cool and sexy stuff, especially anything web based and 2.0'ish.
Enterprise software: The boring stuff nobody sees nor gets you anywhere when striking up a conversation at a cocktail party.
Consumer software is big, but not that big. Online advertising, the income that has to be shared among the most sexy ones like Google, new media and Web 2.0 kind of stuff is approximately 20 Bn $ per year. For an indication about the rest of the consumer software market ask yourself, how much did you spend last five years on non-professional, pure consumer software (not games mind you!)?
Consumer softwareWould suggest "ski bum" to impress socially and enterprise software to impress financially. With one exception; if you're to see a VC next week, refocus your enterprise stuff to the consumer section and do not forget the colour scheme and Ajax while you're at it!
Is a smallish market, has a steady influx of new entries and willing money to ensure ruined margins (work a VC packed drinks party and you'll get the drift). But that cute long legged lady at the last cocktail party was really impressed.
Huge compared to consumer market, has a very restricted flow of new entries to rock the boat nor the margins much. But you need a make pretend answer to "what are you doing" when partying.
One would think that investing in enterprise software is a no-brainer, but not so, seems one actually needs brains to make no-brainer decisions. Lets hope it stays that way. Stop the calls for making enterprise software sexy, leave us alone, and bugger my lack-of-investor-interest motivated string budget.