When Amazon bought Whole Foods, it changed the threat landscape for disruption forever. What else could the Tech Superpowers consume? Clayton Christensen's book, The Innovator's Dilemma, defined bottom-up disruption. But the world has changed. It's time to take a modern look at the different forms of disruption that are changing the world.

1. The Innovation Imperative
What Industries Will the Tech Superpowers Consume Next?
Jedidiah Yueh
Author of Disrupt or Die (launches 10.10 on Amazon)
Founder and Executive Chairman @ Delphix
October 2017

2. -96%
-86%
-77%
-63%
-55%
-33%
-21%
1,934%
-1%
-100% 1,000% 2,000%
Change in Market Value from 2006 to 2016
First, Amazon Ate Retail

3. When Amazon bought Whole Foods,
the threat landscape for disruption
changed forever.

4. Sources: Eater, Time
Here’s how people reacted on Twitter.

5. Then the market seesawed… and it was arguably free.
$13.7B $15.6B
Acquisition price
(28% markup on market cap)
Change in stock price
between June 15th and June 16th
2.4%29%WFM AMZN
Source: “After Its Stock Pop Amazon Will Get Whole Foods Essentially For Free”, CNBC

7. What else could the Tech Superpowers
buy with their incredible cash holdings
and the market seesaw weighted so
heavily to their advantage?

8. The Tech Superpowers,
the five most valuable tech
companies in the world —
Apple, Alphabet,
Amazon, Facebook, and
Microsoft — are worth
more than $3 trillion in
market cap in total.
That’s greater than the
GDPs of Russia and
Canada combined.

9. For decades, entrepreneurs and
executives have referred to Clayton
Christensen’s The Innovator’s Dilemma as
the book that defined disruption.

10. Christensen describes how
industry leaders
repeatedly lose to new
entrants, who build
simpler solutions, targeting
a small, neglected segment
of the market, and then
add features and move
upmarket over time.
In the end, the new
entrant overthrows the
complacent king, who has
spent too much time
delivering incremental
features at the behest of a
few large customers,
making their products too
complex and ripe for
disruption.
Product
Easier to Use, 80/20 Features
Source: The Innovation Triangle, from Disrupt or Die (disruptordie.net)

11. If legacy companies only had to worry
about bottom-up disruption, the world
would be a much more predictable place.

12. The iPod, iPad, and iPhone were
quintessential proof that Christensen
framed disruption far too narrowly.

13. Apple went over the top.
Instead of targeting the
underserved, Apple went
after the high-end of the
market with a significantly
higher price point than
competitors.
Yes, Jobs and company
built a simpler user
interface, but they loaded
their device with sensors,
functions, and an app store
that unlocked a Pandora’s
box of features and
capabilities.
Source: The Innovation Triangle, from Disrupt or Die (disruptordie.net)
Pandora’s box of features
and capabilities
Product

14. Companies such as Tesla,
Nest (acquired by
Alphabet), and newer
entrants like Otto have
followed the over-the-top
strategy by focusing on
superior, not simpler
products.

15. But industry kings need to worry about
more than just bottom-up and over-the-
top product disruption today.

16. They need to worry about
wholesale industry disruption.

17. Personal banking is ripe
for industry disruption.
Millennials — who will
eventually inherit the
wealth of earlier
generations — don’t want
relationships with bankers
and wealth advisors.
They want an app.

18. What if Facebook bought
AMC Networks?
AMC Networks would cost
$5.3 billion at a 28%
markup, giving Facebook
ownership of popular
shows such as The Walking
Dead, Breaking Bad, and
Mad Men.
And it would suck a
portion of the television
advertising industry down
into our phones.
buys

19. What if Amazon bought
the USPS?
With their existing, daily
delivery routes
throughout metropolitan
areas and their knack for
automation, wouldn’t they
be able to run the postal
service at a consistent
profit while dramatically
reducing their own cost of
delivery, to the benefit of
taxpayers and Amazon
shareholders alike?
buys

20. What if Alphabet bought
Mercury Insurance?
Mercury Insurance would
cost $4.2 billion at a 28%
markup. With self-driving
car data from Waymo
(their self-driving car
subsidiary) and data
coming in from Nest,
Dropcam, and Google
Home devices, wouldn’t
they have a prohibitive
data advantage in offering
competitive rates and
services for home and
auto insurance?
buys

21. And what if Apple bought
E*Trade?
E*Trade would cost Apple
$14.5 billion if they paid a 28%
markup (Amazon’s markup to
acquire Whole Foods). Less
than a 6% drop in their
massive $261 billion cash
bucket to establish a major
beachhead into the banking
industry.
Almost overnight Apple could
weave full-service banking —
savings, checking, and
securities investments — into
their phones and other iOS
devices.
buys

22. What else could Apple buy?
With its $261 billion cash
balance, Apple could buy
eleven companies spanning
eleven major industries, at a
28% markup.
And Apple would still have $3
billion to spare.
Source: Google Finance, September 13th 2017

23. In 2016, Walmart’s acquisition of Jet.com
for $3 billion looked like a significant move
by an industry king to check its
competition.

24. After Amazon’s acquisition of Whole Foods,
however, it’s now apparent that it was too
little, too late.

25. With startups disrupting from below
and the potential for mega disruption
by the Tech Superpowers…
What will the Walmarts
of the world do now?

26. Thanks for viewing!
If you enjoyed this presentation, my
first book, Disrupt or Die, is launching
on Amazon on 10.10.
https://medium.com/@jedidiahyueh
https://twitter.com/jedidiahyueh
https://www.linkedin.com/in/jedidiahyueh/