Why do they want to disrupt your market?

The big word in the startup world is disruption, as in “We will disrupt the what-cha-ma-call-it market.” Thinking about last week’s discussion about buying a new vehicle, let’s talk about what disruption is and why “they” want to disrupt our market.

Some examples of disruption

Paypal disrupted the credit card merchant account market. Old news, but it’s a good example. At the time, it was a substantial effort for a small business to get setup so their clients could pay them with a credit card – particularly if there was a web site or phone sales involved. You could do it, but the fees and the startup obstacles put in place by the banks offering merchant accounts were a time-consuming hassle. The assumption was that you weren’t as “real” as a business selling hard goods out of a retail location. Paypal knew better and treated these businesses with honor rather than suspicion and contempt.

Ultimately, Paypal made it easy to get a merchant account. They made it easy by allowing you to manage it online. Finally, they made it more secure by creating a layer between the client and the small business taking the payment. The client gained because they didn’t have to reveal their card number to the small business. The small business gained because the “layer” that kept the card number out of the hands of the small businesses meant Paypal took on the security requirements and many of the risks of card payment fraud. More secure equals less hassle. Easier and less risk for all involved.

You can find many other examples of disruption in the finance-related sector – all of them based on eliminating the annoyances and artificial barriers established by long-term players in that field.

Other examples include Uber (Is the cab business focused on being a high-quality customer-centric experience?) and SpaceX (Is the defense / aerospace business is designed to provide the best bang for the buck?).

Why do they want to disrupt my market?

Simply put, because doing business with you or your peers (or both) is a pain in the keister. When you make it hard to deal with you, you create opportunities for startups that don’t mind doing things differently.

How do they disrupt my business? Mostly by taking the hassle out of it. Those who disrupt your market talk to your clients and identify the things that drive them crazy about working with you. What keeps you from doing that? Nothing other than you being stuck in “We’ve always done it that way” mode.

The real estate market is a great example of how businesses get disrupted. Zillow produced a website that allowed would-be buyers to identify properties for sale before they were ready to contact a Realtor. Will they still have to work with a Realtor at some point? Probably. Before they “get serious”, are they required to deal with the barriers that most real estate firms put in place? Before Zillow and the like, it was all but a necessity. At that point, you did things their way on their terms. Today, you don’t have to engage a Realtor until you’re ready to take some action.

Could Realtors have opened up MLS to web access before Zillow appeared? Yes, but they didn’t. Could they have made it easier to shop before getting signed up with a Realtor? Yes, but they didn’t. Instead, the MLS was used as a wall around the property-for-sale inventory. Until Zillow and similar vendors provided access to this data (or a subset of it), there was little if any pressure on real estate firms to implement such systems or radically improve their processes to make them more client-friendly.

Eventually, they figured it out and created a new Realtor.com that competes with Zillow and similar sites.

Realtors are not the target

These types of problems are not unique to Realtors. They are common to many businesses.

If you look at these disruptive new businesses, they’re usually focused on eliminating the market’s pet peeves.

Referring back to last week’s car lot experience, consider the business model that Vroom.com has put together. It’s not perfect, but it does a nice job of eliminating the horse biscuits from the buying process. And yet, there’s not a single thing they’re doing that local car dealers can’t do.

Will they notice and adopt the best parts?

And in your market, will you?

Looking to disrupt a market?

2015 is shaping up to be a big year in Montana for Startup Weekend. With the Billings event already under our belt and three more scheduled this year (Great Falls, Bozeman, Butte), lots of people are looking for startup ideas.

One place that gets a lot of interest is “stodgy” established markets that are lucrative but neglected from a modernization and/or innovation perspective.

It’s easy to point out markets whose former leaders felt things were good enough. Those markets now have to compete with Craigslist, Uber, Airbnb, SpaceX, Apple iTunes, Spotify, Netflix, Amazon, Expedia, Kickstarter, Zillow and so on.

Ironically, some of these companies have awakened their markets to the point where they are now being disrupted by startups and in some cases, by the original leader in the market.

Things are as they should be in these markets. We earn the privilege to stay in our market every day. When we don’t, we often expose opportunity we’ve ignored, provoking someone to disrupt a market.

Resting on laurels

It’s easy to look at existing markets for disruption candidate because so many existing businesses invite competition simply by virtue of how they treat their clientele.

For example:

  • Do you work with businesses that take you for granted?
  • Treat you poorly?
  • Treat you with disdain?
  • Treat you like they’re doing you a favor?

dWhen a business leaves you feeling like one or more of those, it’s difficult not to consider what it would take to disrupt them out of the picture.

Want to disrupt a market? Disrupt yourself

Look back at that list. Does your business you make your customers feel that way? If they do, one way to fix it is to disrupt yourself. So where do you start?

Four ways that startups disrupt an existing business (or market) are through speed, improved customer service, decoupling and unbundling. Two of these are forgone conclusions that you simply cannot avoid, speed and improved customer service, while the other two are rapidly becoming assumed competitive angles.

Speed – No one’s resistant to the market’s need for more speed at the same or better level of quality. Conventional wisdom says that it can’t be done – “Pick any two: cheap, fast or good“, but conventional wisdom rarely considers what the startup list at the top of the page not only tried, but accomplished.

Improved customer service – To be sure, there are companies out there that do well both in revenue while treating their clientele poorly, but their days are numbered. One by one, they will be picked off – and I’m happy to help their competition do it.

Unbundling – Unbundling involves separating the sale of an item from the delivery of that item. Expedia is an unbundler. They took services offered by travel service providers and unbundled them from the provider who delivers them, made it easy to buy and search for what travelers needed, sold them and collected their cut. Expedia got substantial market share because they made it easy to find and compare flights without having to deal with each provider’ web site and/or phone tree. Unbundling has somewhat limited scope because it only happens at consumption / purchase time, which is why decoupling businesses started popping up.

Decoupling – A decoupler pulls apart the evaluate-select-purchase process that used to be performed at one established business. Decouplers focus on radical improvement of a single part of the process. For example, retailers face competition from decouplers who might mail samples to someone’s home, allowing them to skip a trip to the mall to decide what they want. Once the mall trip is eliminated, another step in the evaluate, select, purchase process might be removed elsewhere. Any point along the evaluate, select, deliver, purchase process is a candidate for decoupling. While the social aspects of that trip to the mall can’t yet be delivered to your mobile device, there are plenty of other ways to address shoppers’ social needs.

Try Startup Weekend Therapy

Stuck on how to disrupt yourself? Take part in a Startup Weekend. I’d be shocked if a weekend in that environment didn’t provide you with ideas and mindset adjustments to bring back to your business.

Want more? Here are a few links to startup idea resources.

http://ideamarket.com/founders.html

http://www.paulgraham.com/ambitious.html

http://paulgraham.com/startupideas.html

http://www.inc.com/rahul-varshneya/4-places-to-look-for-your-next-startup-idea.html

http://old.ycombinator.com/ideas.html (this list is aging, but they might seed a useful idea)

http://www.ideaswatch.com/

What would a HARO look like in your market?

Woolworth. Sears. KMart. WalMart. The Internet. Napster. Amazon. iTunes. Open-source software.

And now, HARO.

HARO, aka HelpaReporter.com is proving to be disruptive to PR Newswire’s ProfNet, a service for subject matter experts (SME) – which could easily be you. ProfNet charges sources to connect with reporters who need an expert to interview for their next story.

NOTE: Reporters and other journalists (hmmm, bloggers?) get access to PR Newswire’s ProfNet at no cost. Only sources pay.

I’m on the HARO list (from a source side) and the queries from reporters are indeed high quality and often from the NYT, AP, etc.

But that really isn’t why I mention this today.

I’m thinking of how you should be looking at this angle.

It might be hard for someone to come into your nice, juicy market and have this kind of impact, but this is far from the first time it has happened.

What would a HARO look like in your market?

It wouldn’t have to be free. Clearly, HARO creator Peter Shankman is getting work as a result, so don’t limit your thinking to “the HARO for my market must be free”.

How long is it going to take you to be a disrupting force instead of the disrupted one feeling the effects of that force?

Or will you simply wait for someone else to disrupt your market?

Think about it.