One of the significant trends that is happening in business, is that the opportunity for people to create new small businesses that make a living but stay small is growing. The cost of distribution, the cost of creation, and the cost of reaching a small target audience are all approaching free. The ability for these small business to meet pain points of a very specific audience far more effectively than the large company can simply because of focus, allows them to win.
If we do indeed have a trend toward a mass of niches, what will be come of the large (10,000+ employees) companies? It seems the large businesses of tomorrow will be those that facilitate the backbone that enables the long tail. These businesses provide or reduce the cost of creating a niche for a large group of people: Google, and iTunes are two bigger examples or Cafepress on the smaller side.
If you’re a venture capitalist, looking for the next big winner of tomorrow, look for the businesses that feed this trend. Can the business help to create a mass of niches and be the backbone behind doing that? Do they provide technology that another large company will have to have in order to provide that backbone?