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Well, I have worked in technology for some years now and tech is an ever-evolving beast. But I worked in tech when it wasn’t that cool or sexy. It seems that the money now involved has facilitated a lot of speculation, hype, and hipsters.

I have a cultural background and engineering and technology always to me was a creative trade, and problem-solving by its nature is an innovation of a kind. But there seems to be something fundamentally misunderstood about The Disruptors.

The Cambridge English dictionary has this to say.

“A company or business that does something fundamentally more effectively than in other businesses before it.”

The common thing is that it is of course technology-driven. Software as a Service business model has exploded the last 5 years in particular and offers lower overheads easier access and faster adaptability to user needs and market pressures. You can access markets at the touch of the button you don’t need to sell locally to be successful and gradually creep out to the world stage you can start taking paying global customers from day one.

This does, of course, depend on your industry sector but broadly the barriers to entry are significantly lower. As long as you are licensed to operate you don’t have the infrastructural requirements or challenges to contend with.

It is also striking how many people who start “Disruptive” companies have little experience within their respective fields. Jeff Bezos was not a bookseller before he started Amazon. Domain knowledge for anything other than the specialized fields of science, health, and engineering is frankly easy to pick up.

Corporates struggle with this for many reasons, some struggle with change with staff who have been there too long and infrastructure from the dark ages. They also fundamentally undervalue diversity of experience and wildly overvalue domain knowledge. If you are promoting someone who has been in the same business for 25 years they either own it or are hardly a great motivational talent. Outsiders bring new knowledge, never movers value only the status quo.

People with little knowledge of technology fail to spot the obvious with the disruptive model. That it is in fact just software. They also fail to understand the basic business model. Nearly all the disruptors of the last few years the unicorns, the subject of huge valuations… are built on Venture.

Venture Capital is a fundamentally speculative investment model. It relies on huge valuations to sell on overvalued shares to what are ultimately the pension funds and mutuals run for everyday folks. It relies on the on Going Public in order to cash in. For the macho VC funders and the founders they work with this can look like a get rich quick scheme (checkout Dan Lyons Hubspot talk for a reality check about the model). Hype adds to the valuations hence the endless tours of startup conferences most founders attend. The founders job is raising endless rounds of capital and selling their business back to the business community.

The nature of speculation brings pressure and uncertainty. Not all businesses can thrive in this environment and many indeed fail as a result. It relies on an instant product and market fit and perfectly timed distribution and sales. Many businesses fail here and with a VC model you just don’t have time to learn.

It is fairly obvious that if you throw huge amounts of capital at something you will have people focused on growth. Blitz-scaling for market domination. People believe this is because something is popular when in fact sales take effort and as long as your proposition is good enough and at a price point consumers will go for then you will, of course, get traction.

Traction does not mean long term success there are many disruptors with huge valuations that have yet to turn a penny. That doesn’t matter as long as it’s a bull market with high valuations it’s likely those driving it will cash in.

Corporates in the meantime try their own version of disruption and fail miserably in many cases. Having apparently completely missed that the culture and the fundamental business model is utterly different from their own.

People also confuse products and features when they’re scouting for start-up talent. I remember Steve Jobs commented that Dropbox was just a feature, not a product. For example, a mobile app that aggregates your accounts in one place is hardly groundbreaking and could be added to any other FinTech app. The market hype means that pointless products like this abound and their limited success and obvious sell out quick approach from the founders says more about their sales talent than the quality of the product itself.

Speculation isn’t a bad thing you have to be in it to win it, and really there are many great businesses who would never have come into being without the venture funders behind them. As much as I am often cynical I am also often impressed and have indeed met some great VC’s. I am also sure many are horrified by the unethical WeWork style excesses in some parts of the trade. The nature of spread betting is also that you don’t know which horse is gonna win, but if it’s your day to day specialism you will have a keener eye and more skill than most.

The Disruptors I believe will win in the end. Many corporates with their lack of dynamic and willingness to change, the previously easy profit, the echo chambers of self-interest all lead to a biased and blinkered view and therefore an inability to adapt when the market inevitably changes. It’s only someone with outside experience and an open mind who can show leadership to real innovation and a new future state.

During every round of speculation, a round of innovation is also created and there are inevitably winners and losers in that. It’s not always the real talent that wins, but if you don’t speculate then how else will you find out where the diamonds are?

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Rahul Krishna

Rahul is a serial entrepreneur has two decades of experience in hiring competent workforce globally. Trying to solve a business problem for startups and young Entrepreneurs by a Coworking Model - Empowerers Coworking City. He is passionate about developing ideas which carry an impact, building human relationships & inspiring people to do amazing things.

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