Venture capitalists and entrepreneurs believe the greatest opportunities are those disruptive to the current state of the art/market. This disruption typically happens with a major technological change (e.g. the PC, the internet, the mobile phone, broadband) and sometimes by the rise of a new geographical market (e.g. new startups in China that take advantage of innovation started in other countries).
There is another type of disruption i've noticed that happens in the consumer space and its "generational". The services that appealed to one generation (e.g. those of us in our 30s like Yahoo, hotmail, etc) tend not to appeal to a new generation (e.g. those in the 20s or teens like MySpace, AIM, etc). A generation shift used to be separated 30-40 years but now it occurs much faster. The rate of change from one age group to the next is so fierce that even a difference of 5 years could mean a whol new pattern of consumption.
This "generational disruption" creates new opportunities at a faster pace than waiting for the next big technological wave - especially in internet media. An example of a disruptive shift that has occured is in my old hunting grounds - online photos.
Consumers in their 30s were early adopters of online photo services because provided a secure and private area to share photos with friends and family which appealed to this generation and their lifestyle (family oriented, concerned about privacy, etc). They didn't really care about "user generated content" and were limited in their "self expression". They valued prints and gifts and businesses like Snapfish and Shutterfly were built to satisfy their needs. Our assumption was that this would be our core demographic of users but we would also appeal to younger users as well since they were adopting digital photography and had the same basic need to share photos. We would provide features that appeal to both of these groups of users.
Over time, we found it's really hard to build your service to appeal to two different age groups - especially when there is a generational shift in usage. Younger users wanted open and public areas to host their photos and they wanted the world to see them and comment on them. They care little about prints and more about showing the world what they are up to and how important they are. One is a commerce model and the other a media model. We frankly couldn't create a service to cater to both groups.
Thus, the rise of Photobucket and social networking photo sites such as Facebook, Tagged, and Myspace Photos. These sites are media models which thrive on reach and page views. Snapfish and others are commerce models where page views aren't a core metric. These sites have all done well against their metrics and although its not clear if a billion dollar media business will come out of online photos, there is definitely demand - manifested quite differently depending on the generation.
Other examples of generational disruption include:
Classmates --> Facebook
Yahoo --> Myspace
Hotmail --> AIM --> Twitter (?)
World of Warcraft --> Club Pengun
There's bound to be more interesting, "generationally disruptive" opportunities in the future happening faster than ever before - and i'll keep my eyes open - this time as a VC vs entrepreneur ; )