In The Innovator’s Dilemma and The Innovator’s Solution,Clayton Christensen talks about how disruption in a market can come from a low-quality, low cost provider nibbling away at the lowest margin business of an established company. That company is almost happy to lose some of this business, as it can focus on its more profitable higher-end offerings. Goodness knows it’s not going to squander its potential profits in a race to the bottom. Often a company won’t consider the techniques and technologies of its downmarket competitor until time is running out, and its competitors are gobbling up ever higher-end bits of what it considers its prime domain.
Today’s meta-market question: What’s at the low end of this, the value-creation market?
Let’s take a look at some data points along the curve…
- Netscape, founded with 1994 with money from well-known VC firm Kleiner Perkins Caufield & Byers, blazingly fast to market with a beta product release in 7 months and an IPO less than a year and a half after being founded.
- Idealab!, which began incubating Bill Gross’s brainchild startups in 1996. The idea was to create economies of (infrastructure) scale so that starting companies, particularly web and software companies, could be launched in a few months for a couple hundred grand.
- YCombinator, Paul Graham’s 2005 angel group, which mini-funds mini-teams of just a few people to build earliest stage companies in a summer.
- and, this year: startupweekend.com, which turns a weekend and a roomful of people into a launched web company (sometimes). It’s like the web startup version of National Novel Writing Month, but can the single-person, spare-time, 1-month startup be far behind? Sometimes, one person with an an idea and some time can create a lot of value.
So here’s the ultimate disruption, aided by the open web, open source, open exchange of ideas: you’re the link at the start of the value chain, innovating with leverage in a loose affiliation with other folks doing the same thing, enabled by technology that nobody owns enough to take away from you.
What are you going to do now?