Remember the Pet Rock? These days, it’s hard to imagine how this simple concept took off just after their introduction in 1975, but that kind of explosive, trendy popularity happens all the time, to this day. It happened with Hula Hoops in the 1950s, Beanie Babies in the 90s, and FitBits in the 2010s. When you look at the entrepreneurs behind these businesses, it’s hard not to admire what they’ve achieved. Gary Dahl, inventor of the Pet Rock, was told by everyone that his idea wouldn’t work. He ignored them—and ended up selling over a million of his tongue-in-cheek novelties in the first few months of sales. The entrepreneurs who manage to hit on the perfect fad seem to have it made—but is investing your time and money in a potential fad a good business move?
The Right Place, the Right Time
Fads have their place, and they very rarely survive after the initial burst of enthusiasm. In an interview with the Oakland Tribune, Dahl once said of the Pet Rock:
“I packaged a sense of humor for a very bored public.”
That’s key when it comes to fads. They’re not designed to last, and they only work if they come along in the right place at the right time, for the right audience. In the 1990s, many people were convinced that Beanie Babies would be worth thousands in the mid-2000s, but they faded in popularity quickly as the 90s drew to a close, and the company simply moved on and continued manufacturing other stuffed toys instead. It’s also worth noting that fads are usually circulated by the young population—older Americans tend to be less invested in what’s trendy, making fads a good indicator of the preferences of the latest generations.
The short-lived nature of the fad stands out in contrast to many of the “startup unicorns” that have emerged throughout the years. These unicorns are defined by being less than 10 years old and valued at over $1 billion. “Super unicorns” are even rarer, gaining a $100 billion valuation in under 10 years. While the hype surrounding unicorns usually dies down somewhat over time, they tend to become a fixture of everyday life, like Facebook, generating ongoing revenue and market dominance instead of fading into obscurity.
Investing (or Inventing) in Fads and Trends: It’s Always a Gamble
As Gary Dahl said in the 80s, “I don’t think you can invent a fad. You just can’t invent a fad.”
So can you come up with the next fad and get rich quick? It’s possible, but very unlikely.
It may also be tempting to chase the next big thing and put your own spin on it, but if you’re on the back side of a fad, it’s nearly impossible to capture the same kind of market share as the competition who did it first. Investing in a company that has hit on the next big thing might also be tempting, but there’s no way to know how long the effects of a fad are going to last. Remember the cupcake boom of a few years ago? Many of those shops have now shut their doors as the fad has begun to fade. Monthly “box” subscriptions have also reached their peak, and the latecomers struggle to gain traction.
Like the Hula Hoop or the Frisbee, a new sport could be created from a fad, prompting lasting sales. Or, like the Pet Rock, Pogs, and Beanie Babies, fads can simply disappear, relegated to dark corners of closets and sparking nostalgia for those who were there for the fad’s magic.
As a business owner and entrepreneur, you can’t just expect to find a fad, get rich quick, and retire. The fad finds you, or it doesn’t—but it doesn’t usually pay to go chasing after fads in the hopes of striking it rich.