Market Wave Indicators

A framework for identifying significant market waves and opportunities, focusing on three key indicators that signal potential massive opportunities.

Core Wave Indicators

1. Intense User Engagement

• Not measured by total users, but by intensity of usage among early adopters
• Look for cult-like behavior among early users
• Users should appear "crazy" about the product/service
• Example: Early MLM companies like Amway/Herbalife succeeded through passionate users

2. Complete Behavior Change

• Users dramatically changing their normal patterns
• Examples:
  • Facebook: People checking site 30+ times daily
  • Twitch: People streaming themselves for 8 hours straight
  • Remote work: Fundamental shift in work patterns
• Look for behavior that has no parallel to previous activities

3. Technology Wave Enablement

• New device/technology enables previously impossible activities
• Examples:
  • GPS in phones → Rideshare services
  • Smartphone cameras → Instagram/Snapchat
  • New hardware creating new software opportunities

Strategic Approach to Waves

• When identifying a wave:

  • Say no to most opportunities
  • Go 100% all-in when you spot a real wave
  • Risk/reward ratio favors aggressive moves on true waves

• Risk Assessment:

  • Consider what you have to lose
  • Earlier in career = more ability to take risks
  • Smaller downside = more aggressive approach warranted

Failed Waves Example

• Clubhouse mentioned as example of perceived wave that didn't materialize
• Even failed attempts can be valuable learning experiences if downside is limited