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The Queen of Disruption

· June 5, 2012

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Long live the Queen!  I’m not talking about the Queen Elizabeth (nothing against Her Majesty, especially in the wake of her diamond jubilee, but associating with anachronistic political institutions is not really the thematic messaging we are going for at DisCo), but the “Queen of the Net.”  Last week, Mary Meeker, now with the Kleiner Perkins and formerly of Morgan Stanley fame, released a data-rich presentation about how the Internet market is changing, and more importantly, how the Internet is changing other markets.  I will not summarize her whole report (you can find some great recaps here, here and here), but I wanted to focus on some key DisCo themes that she touched on–or, more accurately, expounded on.

Slides 29 – 84, the meat of her presentation, focuses on how the Internet is disrupting (or, in her words, “re-imagining”) major industries.  Although there is a ton of interesting information in her presentation, even if her re-imagining points are slightly belabored with 50+ slides, the most telling slide was on page 86.  She identifies the major industries primed for “re-imagination,” from the financial sector (think Kickstarter) to health care (think ZocDoc), and estimates their market value in excess of $36 trillion.  Included in this number is a considerable chunk of the Fortune 50 companies.

Some of these companies will likely craft innovative new strategies for dealing with the Internet (Forbes being a great example), but as “disruptive innovation” guru Clayton Christensen has pointed out in his extensive work on disruption, most miss the boat because the players coming into their space will be smaller, nimbler and able to live on a fraction of the margins of the big guys, who will have no interest in cannibalizing their own revenue streams.  Internet, behold your new enemies.

What will the disrupted do?  Well, most will use their financial and political resources to attempt to block innovation that cuts into their bottom line.  This reaction is not new, and has repeated itself time and time again.

So, what should those who care about this do?  Well, this is where Mrs. Meeker’s wrap up slide comes in.  Her three points go hand in hand: do what you can to innovate, create jobs and improve education, help others understand key issues, AND engage in politics!

Silicon Valley has long avoided Washington, DC, and for good reason.  Bureaucracy, hierarchy and gridlock represent everything the tech industry resents.  However, as the Internet makes more enemies of the politically connected, expect it to draw more enemies inside the Beltway.  SOPA and PIPA were just the tip of the iceberg.  Luckily there is hope. A new wave of innovators, technologists and people who actually use the Internet in a personal capacity (Jason Chaffetz and Jared Polis are two great examples) are beginning to populate the halls of Capitol Hill to help reinforce the few members of the old guard that have in the past fought a lonely battle on behalf of the Internet and innovation (Zoe Lofgren, Ron Wyden and Darrell Issa to name a few).

Also, the same dynamics of the internet that engender status quo backlash, also can make a political splash.  Crowdsourcing meets politics.  Just like you don’t need Goldman Sachs to handle your IPO anymore (and, let’s face it, they probably weren’t going to fund your incredibly cool iPhone tripod anyway), you don’t need to max out campaign contributions to a politician to affect an important congressional vote.  The Internet reduces transaction costs (through both financial and political intermediation) and allows the once disperse masses to channel their political influence the same way a large corporation or powerful industry can.

The Internet furor engendered by SOPA and PIPA that spawned the fastest legislative change of fortune in modern history is testament to this.  But be warned entrepreneurs, innovators, venture capitalists and technology enthusiasts that was just one major battle in a perpetual war.  That $36 trillion of market value will not slink away quietly into the night.

KPCB Internet Trends 2012

Innovation

New technologies are constantly emerging that promise to change our lives for the better. These disruptive technologies give us an increase in choice, make technologies more accessible, make things more affordable, and give consumers a voice. And the pace of innovation has only quickened in recent years, as the Internet has enabled a wave of new, inter-connected devices that have benefited consumers around the world, seemingly in all aspects of their lives. Preserving an innovation-friendly market is, therefore, tantamount not only to businesses but society at large.