A few days ago, I had a phone call with a friend of mine, and we were discussing how the gray market is often a signal of entrepreneurial opportunity.

One of the most famous examples might be digital music. In the early 2000s, college students were busy sharing "illegal" music downloads, while record companies were busy suing college students and forcing Napster into bankruptcy. Steve Jobs saw this as an opportunity, created iTunes, and successfully got all major record companies to agree to sign for $1, turning the underground market into a billion-dollar business. iTunes begot Pandora, which begot Spotify. And here we are now.

The gray market thrives when consumer demand exceeds the law. Many people rented out their bedrooms in violation of local laws; Airbnb emerged and turned it into a $4 billion business. Many private car companies violated oppressive taxi regulations; then came Uber, standardizing it into a $12 billion business.

The gray market always exists in the securities business, especially concerning privately held stock options and employees of tech companies looking to sell some stock. New startups like Equityzen are working to bring transparency to this opportunity.

Throughout Latin America, there is a large informal market where people will do odd jobs for you. Three people from Colombia founded Rappi to formalize this market. They raised $1 billion from SoftBank and are now one of the fastest-growing companies in all of Latin America.

In working with the Miller Center for Social Entrepreneurship, we have graduated several successful microfinance startups that replace predatory loan sharks in developing countries with normal financial services.

So, when you're looking for entrepreneurial opportunities, consider the gray market. Thriving people are often an indicator of consumer demand leading ahead of regulatory agencies and existing businesses. There's gold in there.

This article has been merged into my new book "Launch Path," now available on Amazon.

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