The Dude watches the trajectory of some of the disruptors in the business space, and he has reinforced his belief that long term success and growth is tied to building businesses that are difficult to replicate.

Think old line industrial. You make steel. Simple inputs. Iron ore, coke, some other metals to tune the alloys. In a simple hand build kiln, with care and caution, you could learn to make basic, and some common steel alloys.

But to do it on a massive scale takes some unique components.

  • Shit-tons of iron ore. Very heavy, and thus expensive to transport.
  • Coke - a coal like material that is mined, and needs to be transported.
  • Energy, lots and lots of energy
  • Specialized equipment and a large production facility.

Hence, a lot of the steel mills were built around the Great Lakes or on large navigable rivers to be fed iron ore from Minnesota via barge, coal from Pennsylvania to make Coke, and fairly cheap land to build out a facility to process and make steel.

Replicating this in say Arizona, would be very difficult.

This is an example of a business advantage, and a business that is difficult to disrupt.

Stainless Steel Tubes

Let's look at a couple of early disruptors in Tech, and see what happened to their fortunes.

Case Study - Dropbox

When the Dude first encountered Dropbox, it was AMAZING. 2 gigabytes free (he thinks that was the capacity at launch) storage, the ability to install on his work PC, and his home Mac, and to be able to share files. The business plan was a virtual USB key that kept all files synchronized between each computer it was installed on.

Brilliant.

Simple, easy to use, and very useful. He pretty quickly mashed the buy button to get the 100GB of expanded storage.

Overnight, most if not all of my documents were seamlessly sync'd between all of my computers. Dropbox was DOPE, it was the shit, it was a must have application/service.

Then they expanded it to iOS and Android, and penned agreements with applications makers to seamlessly connect (1Password was the first I remember).
But what they did, partition some cloud storage, build a clever app that synced files to it, some versioning control, and clients for Windows, Mac, Linux, iOS, Android was not rocket science.

The first threat was Google Drive. As a Google Apps user, The Dude got 30GB syncing storage free, and those apps got better with time.

Then came Microsoft's livedrive that later morphed into OneDrive. Then iCloud. In particular the Microsoft and Apple variants were better integrated into the OS, and even more transparent to the users.

The remote synchronization of files became table stakes and Dropbox was no longer essential.

They could have pivoted earlier to business compliant solutions, but Box.com established the presence there (the Dude's employer uses Box, blessed by Infosec). Their Dropbox Business came too late to be a player (but the Dude gets probably two email exhortations to adopt it from the marketing drones at Dropbox a month).

Why did this happen?

Dropbox was early to market, with a killer application, that was widely loved and used. They even had pretty decent free to paid conversion rates.

But their business model was easy to duplicate. Remote, secure, encrypted, reliable storage that just worked. There was a low barrier to replicate and extend.
Follow on evolution to the product were equally easy to replicate.

And once the major OS makers got in the game, their proximity to the core of the OS made them the better solution.

All the tie ins to applications like 1Password, and others didn't have a chance to differentiate Dropbox.

Of course, Dropbox isn't gone, but they are one of many players, all about equally as good, without a dominant player.

The Dude still uses Dropbox for a few things, to share public files, and they do have a "send" service that works pretty well for point to point getting a file to someone without making it world readable. But on his Macs he just uses iCloud (and 200G storage costs like $2 a month), as well as Microsoft OneDrive that comes with his O365 sub for files between his Mac's and his Windows machines.

Case Study - Evernote

When the Dude first encountered Evernote, he was a die hard Mac user that had to use Windows in the office. The king of note taking software at the time was Microsoft OneNote, but it wasn't part of the office suite. You had to pay for it separately. And $119.95 (what the Dude remembers it costing) was enough to not use it.

Enter: Evernote, a comparable note taking application, that was free to start, but to unlock some of the better features (i.e. image OCR to search within attached images) you had to pay. It synchronized all your notes on each machine, and it supported both Windows and Mac. Great stuff. Easy to use, and when they added iOS and Android support, you could say be at a liquor store, and take pictures of wine bottle labels and organize them.

They tried really hard to make it more than it was, slathering on feature after feature, until it was not as easy to use. All in an attempt to keep ahead of the competition. Now, the leaders in this space are pure cloud plays accessed through an app on a device, or a browser in your OS.

In the interim, Microsoft did two key things.

First they built a Mac port of OneNote. And it is the equivalent in every way to the Windows version. It seamlessly syncs with OneDrive, and you really don't have to think about it at all.

Second they included it in the Office suite. So, if you have a license to Office365, for either Mac or PC, you get it. Nothing extra to buy, nothing extra to configure.
For this reason, about 6 years ago, The Dude moved (painfully) all his gathered notes from Evernote to OneNote, and never looked back.

The last he heard about Evernote was a ways back when a new CEO was hired, who stripped a lot of fat from the organization, removing a lot of the superfluous feature bloat, and promised to refocus on their core, synced notebooks cross platform.

The Dude thinks that's too little too late.

Coda

Having a clever idea, and a catchy tech is enough to start the disruption, but you had better be looking to how you can differentiate with difficult to replicate capabilities, lest you become one of many in a crowded space.

Tech make innovation and disruption easy (or at least easier than in old line industries) but that low friction of tech means that the first whiff of success places a target on your back.
Innovate or die.


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