The Grey Market: Birthing Unicorns

Conventionally, a grey market is an unofficial market for financial securities.  Grey market trading occurs when a stock that has been suspended from trades off the market, or when new securities are bought and sold before official trading begins.  The gray market is an unofficial one but is not illegal.  The term “grey market” also refers to the import and sale of goods by unauthorised dealers; in this instance as well, such activity is unofficial but not illegal. 

From the grey market, we have the derived concept of the grey space.  The grey space is the area of opportunity where an investor identifies a need before it becomes apparent, or where a founder creates a market where there was none, to address that need.  This is a relatively new definition, in entrepreneurship circles.  Identifying and exploiting this grey space is where opportunities are found.  This allows us to seize market leadership without the initial constraints of competition. 

These grey markets are opportunities for entrepreneurial growth.  An example is Spotify, the music streaming service.  It was founded on the 23^rd April 2006, in Stockholm, Sweden.  To date, it has revenue well in excess of US$9 billion, and a net income of US$650 million.  It all began with Napster, a peer to peer streaming service.  People used Napster to share files, but it was a pioneer company which never learned to balance its stakeholders.  Recording companies eventually sued it into bankruptcy, but the people was already appraised to a space where they could consume the music they wanted, tailored to their taste.  Apple stepped into the void and created iTunes.  It took almost a decade for Spotify to step into that space, and license the music, selling it to consumers.  These developments took an underground market and turned it into a multibillion dollar a year business. 

As can be seen, this grey market precedes legislation.  It is a place where mainstream society, and legislators, have never considered.  We see this in Airbnb, Uber, Grab, WeWork, Amazon, and so many more.  Before these companies, how many conceptualised a world we can order anything, and it would be delivered?  How many conceptualized riding in the personal vehicles of strangers, or staying in their homes all over the world?  Some of these companies worked, and many more will fail.  But the ones that work will be unicorns. 

Especially in the developing world, there is a vast informal market for everything from banking, to retail, to micro-industry.  These are opportunities, and whoever can come along and formalise it, they now have access to a blue ocean of hundreds of million, or more, potential consumers.  That makes it scalable, replicable, and workable.  This is where the next unicorn is born.