Thread by @studios

How to invest in disruptive innovation?

Learn from investment veteran Simon Erickson the Founder & CEO of @7innovator at #ftw2021

He is focused on identifying disruptive innovation and finding developing trends before others may even be aware of them.

Simon shares 5 principles to spot disruption:

1. Theory of resource dependency
2. Small markets don't solve growth needs
3. Markets that don't exist can't be analyzed
4. Capabilities define disabilities
5. Technology supply vs. market demand

(read on for more details)

1. Theory of resource dependency

-Customers & investors dictate how the money will be spent
-Incumbents focus on sustaining technology and find it difficult to allocate capital for disruptive ideas.

$NFLX as an example

2. Small markets don't solve growth needs
- The larger a company gets, the harder is to address a smaller, emerging market
- Look for visionary companies who are ahead of the growth curve

Example $UI

3. Markets that don't exist can't be analyzed
- Large uncertainty of success in a completely new market
- Companies learn the needs of customers and develop the market alongside their products
- Look for a first-mover advantage

Example: $FB

4. Capabilities define disabilities
- Organizational processes & values can ultimately disable companies from adapting to disruption
- What is the "competitive advantage" armor

Example: SolarCity before being acquired by $TSLA.

5. Technology supply vs. market demand
- Technology often overshoots mainstream market demand
- Look for customer-focused companies who pay attention to how the market is using the product

Example: $SPLK

Simon ends by showcasing 3 disruptions that are happening now:

- Programmatic advertising #Adtech, #ML
- Non Fungible tokens #NFT, #Blockchain
- Modern Vehicles: #EV, #autonomousdriving