As Tim Lee wrote elsewhere, just because "disruption" is often used as an annoying buzzword doesn't mean we should ignore the real value of Clayton Christensen's ideas in The Innovator's Dilemma and elsewhere.
This disruptive think piece will change the world
But in an important sense, I think a lot of what bothers people about “disruption” is neither the idea nor the buzzword but the people who use the buzzword.
Some folks, and especially writers, are allergic to annoying buzzwords. Some even like to showily demonstrate their distaste for annoying buzzwords. And annoying buzzwords are very common in high-tech circles, especially among venture-backed startups. So annoyance at buzzwords becomes annoyance at venture capitalists and startup founders and everyone who moves in their circles. Yet it is crucial to understand that the general environment of buzzwords and hype in which the tech sector is shrouded are not signs of bad character. They reflect exactly what’s good about high-tech startups.
Here is the issue. If your company (like Vox Media!) is funded by venture capital investments, that means two things are going on:
- You’re not profitable enough to finance investment out of retained earnings, and
- You’re not creditworthy enough to get a loan from a bank.
Disaster! Why would anyone ever give a company like that money? Well, they would do it because the potential profits in lending to mature creditworthy firms are pretty limited. By contrast, if you get a small ownership stake in the next Google or Facebook you’re going to strike it rich.
So how do you think you’re going to convince someone to make a long-shot, high-reward investment in your unprofitable, non-creditworthy company? Well, it’s hard. And you’re definitely not going to do it by being humble and well-mannered. You need to sell the sizzle. This company’s going to be bigger than Twitter! And it’s even worse than it looks. Not only are you asking people to take a reckless gamble with their money that probably won’t pay off, you’re asking people who are already rich and don’t even really need the money that will come from your company’s success. So you need to appeal to their vanity and egomania. This company’s going to change the world!
Annoying, right? You’re going to change the world with your new messaging app? I don’t think so. Call me when you’ve cured malaria.
And yet the alternative to the buzz economy is even worse. It is definitely A Good Thing that we have Google and its excellent search engine rather than the bad old indexes we used to put up with. Progress in the domain of commercially useful technology does require someone to make risky initial investments in longshot firms with a small chance of getting big. And it’s really just not especially rational for people to be making those kind of investments. It takes hustle and great ideas, but it also takes salesmanship and hype and buzzwords. Is it really true that every industry is “ripe for disruption” and golden opportunities to destroy incumbents are everywhere you look? Probably not. But there clearly are some opportunities, and they can only be exploited if there’s funding available. And funding requires hype.
See More:
