It was 1964 when Bob Dylan wrote the song, The Times They Are A-Changin’…
And boy, was he right:
Over the coming years, we put a man on the moon…
We invented the Internet and the World Wide Web…
And new technology products have catapulted our world forward, destroying old industries and giving birth to new ones in the process.
At Crowdability, we often write about this cycle of destruction and re-birth.
We call it “market disruption.”
If you can stay ahead of it, you can become very wealthy…
But if you get left behind, well, your wealth will evaporate.
Today, I’ll show you three famous examples of market disruption.
By learning from history, hopefully you won’t be doomed to repeat it.
Example #1 — Disrupt or Be Disrupted
In 1975, a young engineer named Steve Sasson walked into a big conference room and presented a new invention to his superiors.
His invention was revolutionary. Everyone in the room quickly realized that it could disrupt their industry.
But given the fact that Steve’s company controlled more than 90% of the market, the only company that would get “disrupted” would be their own.
So Steve’s bosses — high-level, high-IQ executives — gave Steve a pat on the back, shooed him out the door, and gave him strict orders to keep his invention a secret.
Fast-forward 20 years, and dozens of companies finally caught up and launched devices just like the one Steve had invented.
Steve’s bosses had been worried about disrupting their own business… but eventually, other companies did it for them.
The company I’m talking about is Eastman Kodak.
And the disruptive technology? Digital cameras!
After Apple, Sony, and countless start-ups released digital cameras, Kodak’s market share quickly tumbled to nearly zero – and its stock price tumbled by more than 90%.
Even though the company had a 20-year head start, it still failed to win.
Kodak was so concerned about protecting its existing businesses, it left the door open for hungry competitors — and it got crushed by them.
Example #2 — The Power of Free
Remember this advertisement from the 80s and early 90s?
It’s a commercial for the Encyclopedia Britannica.
As its tagline said, it was “the library that never closes.”
And its value proposition held true for about 250 years, ever since it was first published in 1771.
With a price tag of about $1,400, it wasn’t for everyone…
Nevertheless, Encyclopedia Britannica dominated the market for reference materials, reaching nearly $200 million in annual sales by the early 90s.
But then the Internet came along. And as free reference sites like Wikipedia gathered steam, sales of Encyclopedia Britannica started to evaporate.
Finally, in 2012, after 244 years of dominating its industry, Britannica stopped the presses and closed its doors.
Since then, we’ve seen the Internet’s “free” model disrupt all types of content-based businesses, from newspapers to television to music.
Giving away goods and services for free — and then monetizing by selling advertising or subscriptions — has become a proven method for disrupting huge legacy industries.
Example #3 — Everything is Going Digital
Even as industries like books, music and movies were being crushed by digital technologies, many believed certain sectors would be immune.
Take the apparel market as an example.
If you’re buying a new suit or a pair of shoes, it makes sense that you’d want to try them on in person. You want to make sure that they look good on you, and that the fit is right.
But look at these headlines from 2017:
CNN Money: “Store closings have tripled so far this year.”
Time Magazine: “22 Retailers That Are at Serious Risk of Bankruptcy.”
And The LA Times: “The Internet is mauling America's malls.”
From Sears to The Gap, retailers have seen their profits — and their stock prices! — evaporate.
That’s because Internet retailers have figured out how to address the weaknesses of online shopping:
For example, websites like Zappos (acquired by Amazon for $1 billion) allow you to purchase as many shoes as you’d like, and return the ones you don’t want for free.
And Internet companies have started to figure out the “fit” issue, too…
Last month, for example, I used an online retailer called Proper Cloth to buy a custom-tailored shirt. I never set foot in a fitting room. Instead, I filled out a quick questionnaire – and in ten days, a shirt arrived at my door. It fit like a glove, and I quickly ordered three more.
Bottom line: no industry is immune to the power of technological disruption.
What’s Next?
What industries and companies will be disrupted next?
What new technologies will lead to massive destruction… and will allow investors like you to create massive wealth by getting in early?
That’s what we explore at Crowdability every day.
By focusing on the early-stage, private equity markets, we can spot disruptive technologies like drones, cyber warfare software and crypto currencies while they’re still in their infancy.
Then we introduce you to those technologies — and their associated investment opportunities — before 99% of the public even knows they exist.
So stay tuned!
Best Regards,
Founder
Crowdability.com
