“Then there’s another model from microeconomics which I find very interesting. When
technology moves as fast as it does in a civilization like ours, you get a phenomenon
which I call competitive destruction. You know, you have the finest buggy whip factory
and all of a sudden in comes this little horseless carriage. And before too many years
go by, your buggy whip business is dead. You either get into a different business or
you’re dead—you’re destroyed. It happens again and again and again.
And when these new businesses come in, there are huge advantages for the early birds.
And when you're an early bird, there's a model that I call "surfing" – when a surfer gets
up and catches the wave and just stays there, he can go a long, long time. But if he gets
off the wave, he becomes mired in shallows...
But people get long runs when they're right on the edge of the wave whether it's
Microsoft or Intel or all kinds of people, including National Cash Register in the early
days.
The cash register was one of the great contributions to civilization. It's a wonderful
story. Patterson was a small retail merchant who didn't make any money. One day,
somebody sold him a crude cash register that he put into his retail operation. And it
instantly changed from losing money to earning a profit because it made it so much
harder for the employees to steal... But Patterson, having the kind of mind that he did,
didn't think, "Oh, good for my retail business." He thought, "I'm going into the cash
register business." And, of course, he created National Cash Register.
And he "surfed." He got the best distribution system, the biggest collection of patents and
the best of everything. He was a fanatic about everything important as the technology
developed. I have in my files an early National Cash Register Company report in which
Patterson described his methods and objectives. And a well-educated orangutan could
see that buying into partnership with Patterson in those early days, given his notions
about the cash register business, was a total 100% cinch.
And, of course, that's exactly what an investor should be looking for. In a long life,
you can expect to profit heavily from at least a few of those opportunities if you develop
the wisdom and will to seize them.”
