One of the tools we use to think about how the future might look - and therefore where to invest - is called horizon scanning. We turn data, trends, and anecdotes we see, hear, and read about into provocative-yet-possible future scenarios, and then ask ourselves: “what might we need to do to not only prepare for this future, but also to identify previously hidden opportunities?” 

One of my favorite stories about how looking to the future can transform thinking and unlock multi-billion dollar businesses comes from none other than Joe Coulombe, a man that North American readers will more likely know as Trader Joe.

How Trader Joe Read the Horizon, and Won

Back in the mid-1960’s, Joe was sitting on a veranda in St. Barts, thinking about how to save his grocery chain, Pronto Markets, from a pending disaster. 

Joe had spent weeks reading just about everything he could get his hands on, until he came across three seemingly unrelated pieces of information that he thought just might hold the keys to Pronto’s survival:

1. In the US, in the previous 30 years (1932-1964), college enrollment had skyrocketed from something like 2% to 60%.
2. Over about the same time period, the average passenger capacity of a commercial aircraft had risen from 6.5 people to nearly 500. 
3. The era of consumer homogenization seemed to have hit a peak– for example, extraordinarily high levels of cable TV subscription had plateaued, and seemed likely to decline (spoiler alert: it would, dramatically, from that point on). 

Joe took these three trends and imagined a future in which a more educated, more worldly and well-traveled consumer would look around their local grocery store, stocked to the ceiling with national brands, but with few things that were truly interesting, unusual, or exciting, and be desperately disappointed. 

From this imagined future, Joe crafted the customer persona of Trader Joe’s that’s still relevant today: an out-of-work college professor. And with this customer in his line of sight, guiding his every decision, Joe made a bet that would transform Pronto into Trader Joe’s, and create the most valuable grocery brand per square foot in the world. 

Benjamin Lorr in The Secret Life of Groceries summed it up perfectly: “This was grocery as soothsaying, peering into the hazy present, and laying wagers about where the world would turn.” 

Be Like Joe

Joe’s insight into the future of grocery was wild (and to my taste, affordably delicious), but his story teaches us a few very valuable lessons about how we can adopt similar thinking in our own work. 

First, Joe looked at information both in and outside of the grocery industry and considered the first and second order impacts on his business. In our experience horizon scanning for our own research and with clients, we’ve seen how hard it can be to make this leap: it’s not at all obvious how labor data on college attendance might affect grocery shoppers or employees, let alone the industry overall. 

Part of the challenge is the multiple orders of effect– for example, it’s simpler to assume that more college educated people might be smarter or more efficient at their job, but that wasn’t Joe’s conclusion. In fact, he believed that the main impact of college education would be how these more highly educated people see themselves and the world– with more curiosity and interest in trying things that are new and unusual (as long as they’re affordable). This second-order impact is not as obvious, but in the end, was much more important than, for example, the idea that maybe his employees would be more educated and therefore more efficient. 

Another critical lesson from Joe’s story– he didn’t look back at historical trends to predict the future. In fact, he knew that the future would be meaningfully different, even unexpectedly so, than the past. He didn’t study the progress of retail grocery stores at the time in order to project current trends into the near-future. He looked to the wider world for evidence of where exponential change was developing, and determined how those transformations were going to affect the variable within the sphere where he operated. 

And perhaps most importantly, Joe did not pick a single force and bet the future of his business that it would predominate all others. Instead, he found the intersection of multiple and disparate forces and determined how these could compound to create truly unexpected outcomes. 

Fail Like Joe

Trader Joe’s moon-shot story might at first seem discouraging. His eagle-eyes spotted the most important factors among a list of countless others, he bet everything on it, and it just happened to work out spectacularly. 

But of course, that’s not quite what happened, is it? The number of college graduates, the capacity of modern aircraft, and the erosion of cultural homogeneity were not actually the most important factors affecting retail grocery in the prior 50 years. That didn’t actually matter though. 

Today, Trader Joe’s is neither Walmart nor Amazon, and it would be hard to argue that they’ve met the challenge of, say, the rise of e-grocery or even the local food movement very well. But what they have achieved was imagining a future so clearly and precisely that they actually brought it into existence. And today, despite TJ’s store-brand only stocking policy, the wildly long lines at peak hours, and the rock hard avocados, Trader Joes has a fanatical following and a highly profitable business that has proven nearly impossible to replicate.

This is the value of horizon scanning. It is not about predicting the future correctly. It’s about internalizing a deep understanding that the future is going to be fundamentally different than today, and that aiming to shape it, rather than adapt to or accept it, is the much stronger strategy.  

In venture investing, we think a lot about the balance between being consensus and being contrarian. Contrariness is what sets you apart. But of course, it’s not enough to be contrarian. You have to be contrarian and right and get others onboard. 

Even though Joe Coulombe wasn’t 100% right, he was right enough to make a killing. Despite the years he’d already put into running a retail chain and the expertise he’d gained, he didn’t let his ego (or his confirmation bias) get in the way of being future forward.