A disruptive innovator will eventually win a market and, in the process, will beat the incumbent market-leaders. But it takes time - a successful disruptor doesn’t start out going head-to-head against strong competitors. Consider the rise of PC’s. They eventually became ubiquitous in homes and offices, but the first ones weren’t capable of much and didn’t encroach on the turf of strong competition.
If the early PC developers of the 1970s had been hellbent on displacing mainframes instead of satisfying their early hobbyist customers, it would have been a disaster. IBM still has nearly 9000 customers for its zSeries product line of mainframe computers. Like all legacy technologies, mainframes were sticky and not vulnerable to a head-on assault from a fledging market entrant.
Fortunately for the future titans of the PC industry, the early home computer makers targeted a non-consumption market. In pursuing a nascent market with no established players, it’s safe to say they faced relatively weak competition. The disruptive path was to pick on weaklings.
The Altair was the first successful PC. It competed against weaklings
There’s nothing inherently wrong with a tech company facing strong competitors. Technology is deflationary: the incredible innovation from a few years ago is a lot easier to build today. A successful disruptor is bound to attract intense competition. But once it has direct competitors, then, by definition, it’s no longer a disruptor.1 It’s a regular tech company.
Which brings us back to the title. If your competition is non-consumption or paper & pencil, then your competitor is a weakling. Which means that you are capable of being a disruptor.
disruptor (r) vs its competition (l)
What does this have to do with crypto? Many crypto advocates position bitcoin, Ethereum, the blockchain, etc as disruptive technologies. Perhaps - but if they are true disruptors, then their competition must be weaklings. Does bitcoin pass this test? If its major use case is as a digital store of value, then the answer is probably “no.” It’s easy to buy GLD (the gold ETF) which happens to have a much more stable recent price history. It’s hard to call bitcoin a disruptor when its competition is GLD.
Many other crypto use cases also run into formidable competitors, such as the US dollar. Yet the US dollar is as strong as it’s been in 20 years. Crypto’s success - and clearly it has seen massive adoption on a global scale! - is certainly not because it’s solving the job-to-be-done of the US dollar.
Then what is crypto’s compelling value proposition? In my view, it’s a passionate online social network combined with a casino. That’s not necessarily disruptive, but it’s been quite compelling as a consumer product.
Where does crypto’s online social casino go from here? That’s a good question. It certainly could find a path of disruption. But I hope crypto supporters will realize that if it’s going to be truly disruptive, it’ll need to pick on weaklings.
At least, for the product line that has direct competitors. The greatest startups maintain their disruptive status by continuing to launch disruptive new products, such as Google with post-search products like Gmail and Chrome.