Disruptive versus emerging

Margo Seltzer interviews Michael Stonebraker in the May 2007 issue of ACM Queue. The interview has a number of very thoughtful insights into starting software companies.

Emerging technology is anything that’s new and may be different from the old stuff.
Disruptive technology is an emerging technology that ultimately replaces the old technology.” — Margo Seltzer

The interview describes an approach to new technology development used by large database vendors.

”…in the database world, the large vendors move quite slowly. So it seems the way technology transfer happens is that the elephants just don’t do new ideas. They wait for startups to prove that they work. The good ideas go into startups first. Then the elephants pick and choose from them” — Michael Stonebraker

This approach can be seen looking at Oracle’s recent history of acquisitions. They have used the acquisitions to round out their technology offering and product suites. The acquisition strategy has also been used by Google to acquire new technology and capabilities. Pete Cashmore has a great analysis that indicates that Google might be acquiring more than 1 company per week. Richard MacManus provides a late 2005 comparison of acquisitions by the big 3 (Microsoft, Yahoo! and Google). Don Dodge provides insight into 22 acquisitions by the products group at Microsoft with the MSN group leading the way. SEO by the Sea provides analysis of Google, Amazon and Yahoo. Stan Schroder at Frantic Industries provides further research comparing Yahoo! and Google’s acquisitions.

The OODB guys weren’t faster than the CAD market’s proporietary home-brewed systems. The CAD guys already had mountains of proprietary code to do all this editing. The OODB guys just didn’t solve a big enough piece of their problem, and they weren’t faster, so they were never very successful in the CAD marketplace. — Michael Stonebreaker

A significant portion of the acquisitions were for a technology (and team that created the technology). Figuring out unique solutions to hard, expensive problems is a tried-and-true method. Find a problem that people associate a significant value to the solution.

Business Week: Inside Innovation

I’ve seen a lot of “me too” applications that are essentially copies of a successful applications with no defensible technology differentiator applied to new markets or new market segments. I still have to figure out where the recent glut of media applications fit, but they appear to provide a successful online engagement that offers new ways to advertise. Reddit, Facebook, Digg, YouTube and others capture the attention of online users. They are disruptive technologies for media companies. But they are still disruptive, partially defining what people are doing online, and partially being enabled by these new social phenomena. Like the movie industry, it’s about figuring out How Hits Happen (Amazon.ca) or the Tipping Point (Amazon.ca). I wonder because of the huge successes of a few applications, i.e., YouTube’s $1.65 Billion acquisition, for relatively little investment, $25 Million (Reddit raised $100k for a $12.5M buyout). These are really attractive deals. But as a founder or an investor, I’d look at the deadpool as an indicator how risky this can be.

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