#DISRUPTION. HYPE VS REALITY.

The word disruption is tossed around like a cheap hashtag these days. Innovation, invention, and disruption all seem to be conflated and repeated ad nauseam.

Let’s separate the hype from reality.

Disruption is serious theory of innovation laid out by Harvard Business professor Clayton Christensen back in 1995 (cue a 56k modem screech).

Despite the prevalence of the term, the actual theory itself is still quite unorthodox and misunderstood.

True disruption actually occurs when “firms that introduce rudimentary products can eventually overrun established players by systematically improving the products until they meet the needs of mainstream consumers, generally at low prices.” (Source: HBR)

The key counterintuitive insight here is “rudimentary products” that “overrun established players” over time by “systematically improving the products” at “low prices.”

So when Christensen was challenged to analyze Tesla, which seemed to flip the model of innovation, he gladly took it on. “He assigned his research associate Tom Bartman and colleagues at HBS’s Forum for Growth and Innovation to conduct a deep study of Tesla to determine whether the firm really is pioneering top-down disruption and to assess any other companies that might disrupt the global automobile market.”

The conclusion?

“As Bartman worked through the questions, it became clear that Tesla is not a disrupter. It’s a classic “sustaining innovation”—a product that, according to Christensen’s definition, offers incrementally better performance at a higher price.”

That doesn’t mean Tesla is not insanely innovative and nor is it in any way a predictor of Tesla’s future success. But it does mean that in the true sense of the theory, Telsa will not disrupt mobility: it will not kill off the current crop of established incumbents (some may fall, but that’s just plain ol’ competition) and it will not open up the space to 100-1000x improvements to urban mobility as did personal computers did compared to mainframes.

So, if not Tesla’s electric cars, what are the true disruptive products in urban mobility?

“Bartman’s research points to the “neighborhood electric vehicle”—a low-speed vehicle that resembles a souped-up golf cart. NEVs are used by security on university campuses, for transportation in retirement communities, and for delivery in cities. They cost just a few thousand dollars and are cheap to operate and easy to park. And their manufacturers are starting to add features found in conventional cars.”

RUDIMENTARY MY DEAR BARTMAN

We think Bartman’s research missed the true disruptors by two product categories!

The first category of product that is more “rudimentary,” “lower priced” and disruptive than NEVs are a new generation of superbikes or LEVs (lightweight electric vehicles): electric bikes, electric scooters, electric skateboards, and other types of zippy, green, super-light electric wheels.

They don’t have weather protection, they don’t go fast, they don’t have cushy seats, and they don’t have cupholders. But that’s the point.

The flip side of being a “rudimentary” product is ultra-efficiency and ultra-affordability. Think cellphones vs desktops. Or desktops vs giant mainframes. The counter-intuition here is in the very lack of features and a low price point is what makes products disruptive. It lets incumbents sit on their laurels and laugh off disruptors as “toys,” all the while not seeing the disruptors constantly improve their offerings until suddenly their products seem to be the obvious choice. We don’t hear much from such CEOs after such category revolutions destroy their companies.

In the case of LEVs, rudimentary features and low price points aren’t the end of the story.

Over the last few years, it’s becoming clearer and clearer that cities which have built their cities around the bicycle and public transportation are the cities that are becoming healthier, denser, richer, more attractive to young talent, and ultra-competitive.

For consumers, the story gets even better. In addition to saving a ton of money ditching legacy vehicles (cars), they begin seeing how active mobility makes them happier, healthier, more productive, and less stressed. And now with these superbike LEVs with electric motors and batteries, gone are the downsides of conventional biking: the sweating, fatigue, and the hills. With new, powerful motors and state-of-the-art batteries (made cheaper and cheaper by, ironically, Elon Musk), these things practically fly!

So while sustaining innovators like Tesla continue trying to make cars sexy again awakening fierce competition from incumbents (as predicted by Chritensen’s model, by the way) and contrary to such headlines as The car century was a mistake. It’s time to move on and Why Millennials Are Ditching Cars And Redefining Ownership,” dozens of companies like URB-E, Copenhagen Wheel, Micro Kickboard, Boosted, OjO, PureCycles, Immotor, OneWheel, Sondors, Lithium Cycles, Rad Power Bikes, Elby Bikes, Organic Transit, and many, many others are slowly yet powerfully disrupting urban mobility.

Accelerating Adoption

The second product category (understandably) missed by Bartman’s research is the new crop of dockless, LEV sharing companies like Bird, LimeBike, Jump, and Ofo.

With all the benefits of that LEVs provide, their adoption and hence disruption was limited by the model of new technology adoption where innovators (fans of new technology) are willing to buy untested new products, become product advocates, get their early adopter friends and family to see, try, then buy them, followed by the early majority, and so on.

The dockless sharing model completely blasts open that old adoption bottleneck.

This new model allows literally anyone to spot an available e-bike or e-scooter on their street corner or on their smartphone and with $1or $2 find themselves zipping across town on their new favorite mode of transportation!

Dockless sharing requires zero:

  • Big financial commitment
  • Product research by the user
  • Storage to worry about
  • Maintenance to fret about
  • Charging to remember

It’s like if Marty McFly was able to score a hoverboard anytime he wanted by whistling to one as though summoning Lassie!

Here’s just a taste of the exuberant reception of dockless e-bikes:

 

Don’t Make Us Laugh

Compare this new model of instant, liberating, and dirt cheap mobility that of owning the least expensive Tesla, the Model 3:

  • Fork over $35k
  • Wait a few months (or years)
  • Pay insurance
  • Pay to install a charger (good luck with that if you live in an apartment)
  • Pay the monthly electricity cost of hauling thousands of pounds of metal every day
  • Spend the time looking for parking and paying up (yet again)

What’s that you say? The dinky little toy that can barely do word processing and spreadsheets will never kill the mainframe business?

Money Talks

And now, some serious cash will turn humble e-bikes and e-scooters into the inevitable Davids that will knock Goliaths senseless much sooner than anticipated.

Here are the latest numbers, the most recent rounds of funding raised by dockless e-bike and e-scooter sharing companies:

Bird: $100 million
LimeBike: $70 million
Jump: $10 million
Ofo: A whopping $700 million

Mobility disruption is just getting started…