Marc Ostrofsky on Tech Trends That Shape Our Lives

Marc Ostrofsky is a best-selling author, domain name investor, founder of high-tech trade shows and publications, and a pioneer of numerous telephone and communication services. His first book, Get Rich Click!: The Ultimate Guide to Making Money Online, topped best-seller lists in its category at Amazon, Barnes & Noble, The Wall Street Journal and more. Today, he joins The Motley Fool to discuss the trends revealed in his latest book, Word of Mouse: 101+ Trends in How We Buy, Sell, Live, Learn, Work & Play.

Ostrofsky joins us today to discuss technology trends from apps and cyber security to mobile payments and QR codes, and how the changing tech scene affects our day-to-day lives and businesses. His biggest piece of advice? Know what you don't know.

A full transcript follows the video.

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Brendan Byrnes: Hi Fools, I'm Brendan Byrnes and I'm joined today by Marc Ostrofsky. He is the author of Word of Mouse. Thank you so much for your time today.

Marc Ostrofsky: Thank you for having me.

Byrnes: This book's all about the technological trends that are going on right now. Let's take a step back, back to the '90s. You've started several successful companies, also invested in some successful domain names. Could you talk about that, Business.com? What was the ROI on that one?

Ostrofsky: Well, I was one of the early pioneers in domain names and realizing that domain names are the equivalent of real estate on the Internet. In a world of commerce that goes over the Internet, or e-commerce, the domain name is mindshare.

You want people to remember what it is they're remembering, so flowers is Flowers.com. We bought "blinds," so you have Blinds.com. "Cufflinks" for cufflinks. Names -- one-word or two-word generic names -- are more valuable than "blindsABC123.com."

I invested heavily in domain names because they were a low-priced asset that I thought would be worth more. The long and the short of that story, as you know, Business.com I paid $150,000, which at the time was ridiculous, but I sold it for $7.5 million.

Byrnes: Wow.

Ostrofsky: Then I invested in one that wasn't told to the press, under a non-disclosure at that time.

Byrnes: You're obviously good at spotting these trends. Let's fast forward to today. What's going on right now? Maybe the 30,000-foot big-picture view. What are the big trends that we're seeing, and how should businesses react to these?

Ostrofsky: I think the common denominator that we're going to talk about in this interview is, know what you don't know.

You don't know how to be a CPA? Hire one. You don't know how to be a lawyer? Hire one. Tech is the same way. Now, we're not talking about setting the timer on your VCR, specifically, but it's the same concept. No one knows it all.

You've got social media; let's take that one niche. It's great at finding the right person, targeting that person with an ad that gives you a wonderful ROI because you can drill down to what you're looking for. Advertising and marketing using social media, which is narrowcast -- versus broadcast -- is a big deal. That's a big one.

I think mobile, which we're going to get into, is very big and it's going to dominate. The things you're going to be able to do with this little phone are incredible. If we even talk about apps, there are some apps out that are just shockingly simple and amazingly disruptive.

Byrnes: How about going into the future? What are maybe some of these trends that people don't even know about yet, some crazy trends that might just completely blow their mind? What's coming up in the next few years?

Ostrofsky: Oh, gosh. There's a lot.

Here's what's happened. Every niche that's come out is ... it comes out with a niche and then it expands and then each of these expand, so you've got QR codes, which are probably a temporary technology. I don't know that they'll be around for the long term, but it's like a barcode and you can put a video behind it.

Within the book that you've got, you have those codes throughout the book. We would interview someone, like this, over Skype. We would then put that video on YouTube, attach a QR code, and you hit it with your phone, so I've turned a passive medium -- a book -- into an interactive medium where you can see and hear an interview that I did, just by pointing your phone to that code.

That's a game-changer. I don't know if that'll be here in 10 years, but for now it's a pretty big deal. There's a lot of those interim technologies happening because what happens is they all come out and you've got to see which one sticks; which is easy, inexpensive, has a large audience, and grows.

Byrnes: One that looks like it's going to stick is mobile payments. We have a lot of big-time companies in this space; Google, Apple is there, the credit card companies, Mastercard, Visa, American Express. But it also seems like we've been hearing about this for a while.

When is this breakthrough going to happen? Do you foresee one of those companies winning this? You have Square in there also. How can businesses use this to their advantage?

Ostrofsky: You know, you ask a very loaded question. They're all going to have little pieces of this pie. It's not one big winner, but I happen to believe, personally, that the people who process the payments are the big winner.

Even if you have the technology that reads the payment, someone's going to process that payment and the payment processor knows what you're buying, when you're buying it, how much you paid for it, and they have access to data. The one with the most data always wins the game in our technology market.

You marry whoever's got the best knowledge to whoever's got the good, or better, technology and it's going to be hard to beat.

Between Microsoft and Facebook and the big names we know -- Apple -- and the Squares of the world, and then the people who are processing the payments, it's a shuffleboard. They're all going to have some piece of this pie, and there's people coming out that I'm aware of, a friend of mine who's got a company we won't talk about, that's got a big piece of this, and when he launches he'll own a big part of it.

What'll happen is they'll all get their little pieces and then there'll be a rollup. That's how it happens. It always happens that way.

In the rollup strategy, someone's planning all these payment processors -- it might be Square, it might be Apple -- it could be Microsoft buying the cell phone company. There's a rollup, and that's what'll happen. It's a question of who's got the money to buy the rollup and sees the picture, so they can own their piece of the pie.

Byrnes: Interface wise, you think it's the tech companies that win that? Obviously Starbucks has their digital wallet. Could the retail companies, maybe individually if they have a strong brand like that, or is that just ... it's obviously been successful for Starbucks. Is that because people go every day and it's a small purchase and they use it all the ...

Ostrofsky: I tested it. I like it, but you know what? I put $100 on my phone. I still pay with cash or a prepaid card and I don't use my mobile phone that often, so they've got my money, and it may end up being breakage. "Breakage" is the money they get when you don't finish using it. It just sits there. That's a real advantage.

Byrnes: Sure.

Ostrofsky: I don't think it's a Louis Vuitton that's going to own that market. I think they're all going to test it. It's a new technology. They're all going to test all the different ways, and something's going to take hold. We don't know which one's going to take hold.

I'm not a Fool -- Fool -- I can't tell you which one will take hold, but it's knowing what you don't know, and saying, "I know this is a very hot area." Until someone proves to me that they're going to be the big winner, it's "keep researching the area," and the area we're talking about is mobile payments. That's the end-all, the be-all, and it's taking of in other countries much more than it is here.

Byrnes: Taking a step back, what do you think is one of the biggest mistakes that businesses make when they're trying to embrace these trends? Obviously, a lot of these are in their nascent stages so there's no playbook for looking at a lot of these.

Ostrofsky: No.

Byrnes: How can these businesses really embrace this without making mistakes?

Ostrofsky: You know, if you're talking large businesses or small businesses ... large businesses typically do a lot of research and then pick one to go with.

Small businesses test lots of them, or call a friend -- phone a friend -- they call and say, "What have you used? How's it working for you?" and they find out ahead of time. But it's still that same, "I've got to research what my competitors are doing."

My dad was a professor, and he would say, "If you keep doing what you've always done, you'll keep getting what you've always gotten." Now, that works for dieting; eat less, work out more. But in business, it is not true anymore. If I stay where I am and you're getting ahead, I'll disappear.

You have to keep advancing, but you have to go, "OK, I've got to have someone watching over mobile. I've got to have someone watching over retail. I've got to have someone looking at apps."

I like that you can walk into a retailer and if you're on your Wi-Fi and they know you're there and they can download a coupon to you for the thing you bought the last time -- to give you 20% off on that same size shirt you bought -- that's powerful stuff.

They're all going at the same time. It's not just one or two things. It's 20 or 30 things, and you've just got to keep your eye on what's really hot.

Byrnes: Right. I think a lot of people would argue that Microsoft missed one of these big trends when it comes to mobile.

If we're talking about some of the big -- not even big -- but some of the technology companies out there, who are the best right now at seeing these trends ahead of time and really embracing that and using that to hit the top and the bottom line?

Ostrofsky: Oh, you're asking me questions -- that's good -- that I'm probably not wanting to answer.

I like that Microsoft has always got a big, dominant position. I like that Apple does, but I think Nokia is really interesting, and the stuff that they're playing in, and the way they approach the market, is really interesting. Much bigger footprints outside than inside the U.S., I think. I'm not sure; I don't follow it.

I'm not trying ... I don't invest in all these companies. I have people that I give my money to, to do the investing. But from what I see and what I read and what I hear, the phone companies and the cable companies are going to dominate this world.

The cable companies, when -- you know, recently -- one of the big networks got shut off because the deal wasn't in place.

Byrnes: CBS and Time Warner.

Ostrofsky: It tells you the power of that cable company.

Byrnes: Right.

Ostrofsky: It's a big deal. Big deal. I like Liberty Media a lot. Liberty Media is huge. I think Liberty Media is going to be a killer stock, personally.

Byrnes: Interesting. We'll definitely keep an eye on that.

Let's switch over to cyber security. How does this play into all of these trends? Obviously businesses have to be on the lookout for this, customers are increasingly conscious about this. How does it play into trends, going forward?

Ostrofsky: Well, again, I'm going to go back to it. You've got to know what you don't know. What we do know is that cyber is infiltrating every area, personally and professionally. You have to know, "How are people hacking my accounts? What emails can I open? What emails do I avoid?"

In the business side, "Can they get into my network? What do I have to have in the way of security?" Bring in a hacker and say, "Try and hack my account." That's a brilliant way to do it.

There are companies that are made up of hackers and former -- reformed -- hackers that got caught, that said, "You can turn this into a business. We'll pay you to try and hack our accounts."

In business and the level we're talking about on this show, that's what you need. You need to find out if you are vulnerable, and you find the biggest company that owns those brilliant brains that can hurt your company, and hire them.

You know when they say, "If it's not broken, break it?"

Byrnes: Yeah.

Ostrofsky: How about, if I haven't been broken into, hire someone to see if they can break in. That's really important because at least they're on your side and you're not going to find out later. I consider that a big deal.

Byrnes: As investors, it's important not only to look at what's ahead, but also to look at the companies you need to stay away from with the technology that's disrupting them. Could you talk about, maybe, some industries that these trends are disrupting, and some that you might stay away from?

Ostrofsky: Wow. I don't know that I can answer that question.

Byrnes: Yeah. That's fine.

Ostrofsky: I like the markets that are approaching the high end products we're talking about. The people who are saying, "You're going to get hurt if you don't deal with this." Cybercrime, if you will -- people that are one step ahead of cybercrime.

There's a company out there called Reputation.com. They're leading the market in fixing and cleaning up your reputation online, because it's important.

I happen to like, a lot, as we talked before the show, the digital wallet and that is so exciting. The numbers are so ridiculous big. E-payments -- people who are saying, "We're getting bigger and processing the payments within these markets" -- I think that's a very big trend, and it's going to get a lot bigger before anyone gets hurt because they'll get big and then they'll get bought out.

Byrnes: Who did you write the book for, and who needs to read it?

Ostrofsky: You know, it's funny. The last book was all about making money on the Internet. When I researched that book, this book came up as, "There's a lot of trends that prove people have been successful in education and the way education is being used, embracing the technology, so the kids are learning faster, better, quicker, smarter."

It came up that this is happening in the way we buy and the way we sell, and the way we live -- e-trade -- and all the ways that we're living came up. It became a broad-based book, like Megatrends for the masses, i.e., Word of Mouse -- M-O-U-S-E -- is why we called it that.

It's kind of a cute name, but it is that mouse and the Internet and the way technology is changing the way we do everything.

I like apps. Apps are cheap and they're powerful. They're powerful, and I want to tell you about one app -- I'm not tied to them at all -- but it's a game-changer. I won't even give you the name, how's that? Well, I'll give you the name.

It's called SignNow and I use it because, in the old days, everyone watching this show has to sign contracts at some point. When you get a contract, you have to find a place to print it, print it, sign it, send it back physically, send it back email -- with scanning it -- or send it back by fax.

This app, it's a $2 app, I think. You open it, you sign it with your finger, and you hit send. And you're done.

That is disruptive. That is a game-changer. That could wipe out the fax market. Who needs a fax if you can just sign it with your finger on your phone?

Byrnes: Yeah, absolutely.

Ostrofsky: That's a big deal. It's that kind of simplicity that really disrupts markets.

Byrnes: Well, it's a fascinating book, looking at all these technological trends. Marc, thanks so much for your time. The book is Word of Mouse. Thank you.

Ostrofsky: Thank you. 


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