Business Models of Disruption: The Types of Companies and People to Follow
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There are many famous disruptors out there: Steve Jobs, Elon Musk, Bill Gates, Kanye West, and Jack Ma to name a few. However, there are also hundreds of lesser known disruptors that have been just as influential in their industry.
Disruption can be tricky to pull off, and it is even more difficult to sustain that disruption, but some people have been able to silently pull it off for years without getting the credit they deserve. Every disruptor has an inspiring story, and many of them have lessons to share.
What do the big name and lesser known disruptors have to teach us about the process of disruption? What industries are ripe for change and waiting for their next big disruptor? Let’s find out which industry leader is worthy of becoming your next role model.
The Top Disruptive Companies
It would be impossible to name every company and industry that is out there experiencing disruption, but there are some key disruptors we can look to for information.
CNBC has released a list of the fifty top disruptors for five years running, and their latest list has revealed that 31 of the 50 are deemed “unicorns” in their industry. Unicorn companies are defined as start-ups that appear, seemingly out of nowhere, and suddenly become billion dollar companies at a rapid rate. They reach the unicorn status when their revenues top the billion dollar mark. Examples of this are Facebook and Google, which are both deemed “super-unicorns” for sustaining over a billion in revenue for over a decade. Unicorn companies normally exist within the tech industry, as many of them are based around websites, social media, or other online-oriented capitalist ventures.
CNBC created this list by looking at qualitative and quantitative markers. In other words, sales, user growth, as well as the type and variety of patents each company holds, all went into the decision making process for this list. After five years of compiling this information, seven companies have remained in the top 50 all five years: AirBNB, Dropbox, Spotify, Pinterest, Palantir, SpaceX, and Uber.
The Industries Being Disrupted
When looking at the CNBC list, there are a plethora of industries being displayed. Just within the top five on the list — AirBNB, Lyft, WeWork, Grab, and Uptake Technologies — there is everything from the hospitality industry, to coworking spaces.
However, many of the unicorns and disruptors of today stem from the tech industry. They are either revolutionizing some form of online service, or they are utilizing modern tech and big data to enhance their business. Tech is still a booming industry, and has many different facets that can be utilized to create a disruptive model.
Forbes Magazine also highlighted the top four industries that are facing disruption in our current economy. According to their data, the top four are: e-commerce, food tech, financial services, and enterprise. All of these industries are facing massive changes that could be brought on by big data and adapting to technology:
- For e-commerce, online shopping has become the new normal, and brick and mortar stores are starting to struggle to keep up.
- Food tech refers to online delivery services (such as the new UberEats) and meal-kit subscriptions (such as Blue Apron) that are changing the way people order, eat out, and create at-home meals.
- Financial services are seeing a disruption through the creation of all-in-one services like Zenefits (offering HR and payroll solutions in one), as well as companies like LendKey or SoFi, which both offer refinancing solutions for student loans. Some other financial services — Avant is one, and another is the Hamburg-based Kreditech — are looking to bank with the underserved: re-imagining the role of credit numbers and offering second-chance loans.
- Enterprise refers to the growth of open-source mobile operating systems, and a handful of different companies are jumping on this bandwagon. The disruption exists within how these programs offer information to the customer: with less gatekeeping on language, and a more user friendly approach to train those that aren’t “techies” by nature.
The People that Disrupt
At Fiscal Tiger, we’ve covered in the past how innovation can be sustained over a long period of time, and how certain mindsets are more likely to see extended results. But who exactly is sustaining this change in the industry, and who has the potential to become your new role model?
Of the top five business on the CNBC list, each CEO has their own bit of advice to give. Let’s look at what each has to say about the process of disruption, fighting through challenges, and overcoming naysayers.
On Finding Funding and Never Quitting
Brian Chesky is the CEO of AirBNB, and has a lot to offer on the rough start his business had in the beginning. Unfortunately for many who have a start up dream, money and finding investors is often an issue. After months and months of hearing “no’s” from angel investors, it can be extremely difficult to keep going. But as Chesky notes, the most important key is to never give up on your unique vision. During an interview with Fortune Magazine, Chesky noted:
“We probably got 20 introductions [with investors]. Most of them didn’t meet us. We probably met a half a dozen people. People mostly ran away from – well, everyone ran away from the idea. No one funded us. The first reason was Joe and I were designers. And as far as they were concerned, designers didn’t start companies. We didn’t “look like” tech founders, which I think is ridiculous, because I don’t think you should ever hire someone just because they look like something else. If you want a new thing, well, maybe they’ll look different.
[…] You don’t need millions of dollars to start an idea, though. Unless you have fixed costs, you don’t need any capital to create a prototype. Ideally your co-founders, with sweat equity, can create the product themselves.
There’s also a bigger lesson, which is we just didn’t quit. I think a lot of people who try to do what we did, or try to do other things, they quit, they stop short. A lot of people ask, ‘Why didn’t you quit?’ The reason we didn’t quit is if you start a company, very simply, you have to know something no one else knows about your business. You need to have a unique insight. And we had a very simple, unique insight. It was totally by happenstance. When we rented our home one weekend, our unique insight was, it’s actually not weird for strangers to stay with other strangers. And you can make a bunch of money and the people who travel there can save money and have an amazing experience. If people could just experience what we experienced that one weekend, this would be an idea that would spread around the world. And again, maybe thousands of people one day would use Airbnb. That was our unique insight, so that was kind of our star. We just kept thinking in [those] terms. That’s why we kept going.”
On Building (and Maintaining) a Disruptive Culture
Lyft’s CEO is Logan Green, and although Uber may have set the bar for ridesharing, Lyft has surpassed their competitor by investing in a wider variety of unique patents and ventures. They not only are interested in ride sharing, but also autonomous cars, creating 3 people carpool lanes to reduce traffic in cities, building up local economies, and cultivating an infrastructure that relies on positive business practices.
Unlike Uber — which has a cutthroat reputation for doing business — Lyft wants to be known as a “nicer” option: focusing on developing positive relationships with investors and employees, and investing more in background checks and safety measures for their drivers. Additionally, when Lyft is confronted with cities or groups that are reluctant to welcome the company, Green has found that playing nice isn’t only a better option, but it often gets the results you want from the group that is challenging you. In an interview with StartupGrind in 2015, Green stated:
“Particularly when it comes to the regulatory environment, being a jerk doesn’t actually get you very far. The folks that you need to work with are the ones who are making the decisions. A lot of the other companies in the space have really left a bad taste in regulators’ mouths. It’s actually been a huge advantage when we come in and we take the time to sit down and get to know them, explain the business, explain what we do. I think we’ve gotten a lot further being able to change regulations with that approach.”
But being nice does more than get the results you want for your business, it also helps retain employees and can foster a more positive company culture. When it comes to building a disruptive culture, you also want to ensure that your culture is one that can withstand challenges and retain the skilled employees that are behind your rise. If your company is constantly cycling through employees and investors, the road to success will be much more challenging.
On Diversity and Breaking Barriers
The term unicorn might be used in Silicon Valley to describe the rare business that reaches the billion dollar industry, but even more rare in Silicon Valley is gender and racial diversity. Some disruptive CEOs have noticed this and are speaking out. Not only because diversity is important to create more opportunities for people, but it also leads to greater innovations, which is vital to disruption.
Within Silicon Valley, there exists a “boys club” of sorts: where women are often harassed, overlooked, or simply not included at the table of executives. Susan Wojcicki, the CEO of Youtube and previous marketing manager to Google, highlighted the diversity issue in a Vanity Fair piece from March, 2017, and suggested a simple solution: hire more women.
But women are not the only underrepresented group: people of color are also rare to find in Silicon Valley. One engineer who has worked for Google, Slack, and is now the director of engineering for Kickstarter, Erica Baker, has been an advocate for diversity and equal pay since joining the Silicon Valley industry. She has been a part of disruption on various sides, but she also sees how many individuals (particularly people of color) feel as if they aren’t heard or understood. She notes that the CEO often is the one to set the tone of a company, and it is up to the CEO to really make an active effort to extend more opportunities to minority groups.
It is through diversity that innovation happens. As an executive with GE, Beth Comstock, noted in a recent Vanity Fair New Establishment Summit:
“Part of the challenge is, people want to hire people like themselves. […] who is setting the standards? Are you working hard enough to make the standards wide and inclusive and have the right access? And I think often, we just want to hire people like ourselves, and it’s incumbent on anyone: if you want innovation you’ve got to work really hard to hire people that don’t agree with you, who don’t look like you, didn’t come from you, didn’t all go to the same school, come from the same network. It’s really hard. It’s really tense. It means if you’re leading those teams you have to work harder. It honestly takes more work.”
Becoming a Disruptor
Every disruption involves some level of challenges. Sometimes that comes in the form of financial troubles or lack of investors. Other times it comes in the form of bad hiring practices and not enough challenges to keep your business model disruptive. However — despite all the years, challenges, and wasted money — disruption can happen for those that stick it out.
If you are hoping to become your industry’s next disruptor, take some of the advice of this years top executives. Challenge what you think you know and stick to your dream, no matter how big it is. There will always be people to tell you no or doubt your success, but only you can know your idea’s true worth, and hopefully see it into action. The world will be excited to see it when it’s ready.
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Katie McBeth is a researcher and writer out of Boise, ID, with experience in marketing for small businesses and management. Her favorite subject of study is millennials, and she has been featured on Fortune Magazine and the Quiet Revolution. She researches SEO strategies during the day, and freelances at night. You can follow her writing adventures on Instagram or Twitter: @ktmcbeth
This post was updated March 29, 2018. It was originally published October 24, 2017.