I'm an entrepreneur who builds and develops startups. In my line of work, I meet a lot of other entrepreneurs who ask for my point of view about their latest ideas. When this happens, I ask them 5 questions:
- What is the problem you are trying to solve?
- Why and how did this problem come to be?
- If you succeed, how will the market change?
- How will the world be different if your idea solves the problem you set out to solve?
- Who will disappear from the market, as a result of what you do?
If they don’t have good answers to these questions, I tell them their idea probably isn’t big enough, or it won’t make enough of an impact.
I tell them that when we talk about disruption, we’re actually talking about impact, changing behaviors and finding new ways to do business. And we’re not just talking about “disruptive technology" --sometimes entrepreneurs focus on the phrase itself rather than how a particular technology will change or disrupt the market.
When we talk about disrupting the market, here are the examples I use:
- The iPhone, when it was first released, was an excellent example of a new product that doesn’t exist in the market --not something better, something different.
- A new price. What set Waze apart was that it was --and still is --a free service. By and large, if you're good enough and free, you're going to win the market.
- By changing a business model, let's say the model for renting a short-term apartment, it’s possible the entire market equilibrium will change. See Airbnb and Uber for examples of this.
To really disrupt the market, you must offer at least one of these elements. In doing so, you create a new equilibrium in the market, which in turn creates an opportunity for new players and new consumers. It also threatens existing players.
Take Waze as an example: the technology was embedded in a major market shift — the move from PDAs to smartphones. We were on the frontlines of a market disruption that saw the touchscreen kill the keypad. Waze was offering a disruptive technology that was free and good at what it was solving for.
So, which markets are ripe for disruption today?
Take a good look at markets where information is missing. Think about markets for professionals — auto mechanics, contractors, plumbers, lawyers, accountants, doctors, etc. We, as consumers, still don’t know enough about the quality of the professionals and prices we seek out.
Specifically, look at:
Markets that involve intermediaries. think of insurance agents, travel agents and real estate agents.
A market in which there is a large gap between price and value. Think of everything from buying a new car to buying new clothes.
A market in which there is regulation that does not work. For example, 80% of employees in Israel are entitled to some refund from the country’s Income Tax Authority. However, many eligible employees don’t even know they’re eligible, and if they do, the regulations and red tape surrounding this benefit make it overly complex and complicated.
Uri Levine is the co-founder and chairman of Waze, the world's largest community-based traffic and navigation app which was acquired by Google in 2013. He serves on the board of several mobility startups.
