While I was checking my twitter feed, I noticed a tweet by Chris Dixon: “Excellent video — “The Coming Disruption Of Transportation And Energy” (via Fred Wilson).
A. Ons of the best VCs in Silicon Vally describes something as an “Excellent", Definitely worth checking.
B. I know too little about what is happening around transportation but nothing about energy. Why not get some fresh thoughts about coming disruption of this industries and/or at least watch how someone excellently presents disruption of something, what is his thinking, pattern recognition, which may be useful to think around something I am interested in, SaaS market.
At the end of the first 11:30 minute I was like — “What a start, first two slides … Interesting, I can just keep watching and find new things”. Many know Peter Thiel and his really great book Zero to One and his thoughts about technology, disruption and markets. Let me introduce Tony Seba, who spent the last decades studying technological disruptions. He is the author of several books, educator and creator “Seba Technology Disruption Framework”.
- “It’s usually the ‘experts’ and ‘insiders’ who dismiss Disruptive Opportunities”
Tony mentioned some interesting cases, such as when Mckinesy & CO forecasted cell phone adoption by the year 2000 as 900 000 subscribers, they where paid $5M for this forecast. The actual number? 109 million. AT&T Disrupted while $$ Trillions created. “There is no chance that the iPhone is going to get any significant market share. No chance…” — Steve Ballmer, CEO Microsoft, 2007. “The iPhone’s impact will be minimal. It will only appeal to a few gadget freaks. Nokia and Motorola have nothing to worry about” — Bloomberg Analyst.
There are very few people who have a capacity to see the future.
“Since most humans have a much easier time understanding what is, if you suggest that what they see is wrong, it’s very disconnecting and they hate it. because they are trying to understand their world and predict their future — thats’ the main function of cerebrum, to find the patterns and predict what is going to happen next — and insofar as they realize that the future to them is somewhat grey or even black, its’s scary.” — James Currier, quote from Founders at Work.
Tony on hist talk mentioned Kodak.W while it had record financial results during 2000, Kodak CEO said to investors that “A great brand, a great balance sheet, cash flow. This is very smart time to be in the picture business”. 12 years later Kodak filed for Bankruptcy Protection. What happened ? Digital camera. Who invented it? Kodak. It is not like they didn’t know what was coming.
In addition to, I have to mention another great story from the article — When you change the world and no one notices. One, the first passing mention of the of the men,Wrights, who conquered the sky for the first time in human history in The New York Times came in 1906, three years after their first flight. Two, in 1904, the Times asked a hot-air-balloon tycoon whether humans may fly someday. He answered:
Wilbur and Orville Wright conquered flight on December 17th, 1903. Few inventions were as transformational over the next century. It took four days to travel from New York to Los Angeles in 1900, by train. By the 1930s it could be done in 17 hours, by air. By 1950, six hours.
I read article about ways to dismiss technology by Benedict Evans and he wrote interestingly that “The question, is not whether something works now but whether it could work — whether you know how to change it. Saying ‘it doesn’t work, today’ has no value, but saying ‘yes, but everything didn’t work once’ also has no value. Rather, do you have a roadmap? Do you know what to do next?”
You should be worrying about making something useful, not how disruptive you can be — Jason Kohen provides very interesting thoughts on disruption.
Another question is why do smart people at smart organizations consistently fail to anticipate or lead Market Disruptions? To answer this question Tony developed Technology Disruption Framework which can help anticipate when a given set of technologies will converge and create opportunities for entrepreneurs to create disruptive products and services.
2. “Disruption is when a new product or service helps create a new market and significantly weaken, transform, or destroy an existing product market category / industry. Disruptions are made possible by the convergence of technologies and business-model innovations
enabled by these technologies. ”
One of the most important things to consider is technology cost curves. Technologies have cost-improvement curves, which show the rate at which a given technology improves over time. The best known technology cost curves Moore’s Law, which postulates that computing power doubles every two years or so. Tony advises that when we look at technology cost curves, it’s important to know what the main driver of the improvement is. One important concept is technology convergence. Single technologies are not what caused disruptions. Essentially when you have several technologies, each one improving at a different rate, converge at a certain point in time to make it possible for new products or services to be developed.
Tony said that technology convergence in 2007 to make the smartphone possible. Hard disk $ per cost per bit down 50% every 18 month, Pixel per $ — 59% / year, the $ cost of transform it a bit decreases by 50% every 9 month. Touchscreen, Li-ion batteries, sensors. What is more interesting is that Google launched Android within months in 2007. That’s because the convergence of technologies that made the smartphone possible.
While I was thinking about this concept, I remembered case of Push Notifications, which created circle of opportunities for messaging apps, disrupted SMS/MMS while $$ created — especially for WhatsApp. I remembered when I read story of WhatsApp, if I remembered correctly, founders were thinking to fold the idea for several month, but as soon as Push Notifications introduced by Apple, which lets developers ping users when they aren’t using an app, they implement it instantly and then you know what happened.
The other important thing introduced by Tony is the concept that technologies get adopted as an s-curve. He explained that when you look at mainstream projections say of EVs or solar and whatnot you see a linear projection. No successful technology in history has never been adopted on a liner basis, ever, it gets adopted as an s-curve. Once you hit that tipping point essentially it can move sideways for a long time and then it disrupts the existing market and it growth exponentially. People saying that “oh, its only two percent of the market” and then BOOM it’s 80% of market in no time.
At first, I get the idea about an s-curve from Benedict Evans article — the end of smartphone innovation.
Benedict said that “The fun part of this kind of innovation is that when you’re at the end of the curve the stuff at the beginning seems really boring. It didn’t feel like that at the time. Today this video of the iPhone from 2007 seems almost baffling — of course all phones are like that! Not then they weren’t. Lots of people even claimed the demo was faked.”
The interesting thing about s-curves is not only that they’re exponential but it is getting even steeper. Meaning that disruptions are happening even more quickly.
Huge thing in disruption is business model innovation. A business model includes the core logic and strategic choices for creating and capturing value within a value network. For example Uber, which did not even exist 10 years ago, their bookings are higher than the whole taxi industry in America. Same and even quick disruption story from Airbnb, Netflix, Dropbox. Same story from LinkedIn — just have a look at LinkedIn’s Series B Pitch to Greylock. Tony explains that a business model innovation that was enabled by two things the cloud and smartphones. Essentially they took advantage of that convergence. Business model innovation is as important & disruptive as technology innovation.
Read full Technology Disruption Framework here and rethink technology disruption and/or watch his closing keynote Anticipating & Leading Market Disruption.
Thank you Tony Seba
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