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and by substantial amounts of invested capital in formal amenities required by incumbent brands that are frequently cost centers rather than profit centers (lobby restaurant, room service, etc.). Image courtesy of Mint House Real estate lies at the core of our everyday lives?—?it MORE
Airtable isn’t the only company in this collaboration space — incumbents have invested resources in “low-code” platforms, such as Google’s App Maker, Microsoft’s PowerApps, Dell’s Boomi, and Intuit’s Quick Base; other great products on the startup side include Superhuman, Notion, Front, Coda, and a few others. MORE
Conventional wisdom dictated that incumbents should focus their innovation efforts on R&D and growing their cash cows while investing in a few startups. The following is an excerpt from 500’s CVC report. How has corporate venture capital changed? In the decade since the Great Recession, we have seen digital upstarts – taking advantage of disruptive technologies from AI to IoT – reshape the economy and the corporate pecking order. MORE
So when Sam Rosen came to me with the idea of disrupting storage with a product that is priced cheaper than existing incumbents and he could build a product that is a better service I was intrigued. dominated by a few very large incumbents who control much of the distribution or are you going into a market that is “fragmented” where nobody controls the industry. Incumbent Strengths & Weaknesses. Many startup businesses – tech or otherwise – fail. MORE
Incumbents can’t react. The reason that incumbents can’t react is that their revenue and defensibility are continued by serving the high-end of the market for which it would take too much time & money for any competitors to effectively challenge. MORE
More recently, this trend has shifted a bit within the Bay Area, which today’s giants like Uber, Airbnb, and Stripe being built in San Francisco proper while incumbents down south have begun scooping up premium commercial real estate in the city. This is a post I’ve wanted to write for a long time, but I needed the time to digest all the other great posts on the topics by other investors, and to analyze specific portfolio data from Haystack over the last five years. MORE
Hello. It has been a while since I’ve posted here, nearly 3 months. My fingers are well-rested, but my writing prowess is likely rusty, so please forgive any rustiness in this post. I do plan to write a lot more this summer, so stay tuned. MORE
You can’t simply drop a bunch of electric scooters in a market and hope to compete with the data and software advantages of the incumbents. The Truth About the Scooter Economy?—?An MORE
We have reached a point in SaaS where a small fraction of an incumbent is a billion-dollar company. the industry has been looking for ways to compete with some of these incumbents for a long time. I suspect old-fashioned product marketing may be the disruptive force to prise $1 billion worth of market away from some of these incumbents. Salesforce is worth $113 billion. 1% of $113 billion is $1.13 billion. ServiceNow is worth $34B and Workday is worth $33B. MORE
Using the proliferation of newly GPS-enabled mobile devices to enable taxi hailing and beat out stagnant incumbent providers was always going to be a big win for consumers. It provided a better service than existing cabs were going to be able to do for at least several years—cutting out lots of unnecessary overhead in the system. Had it been built differently, it could have been a better company and honestly I’d like to believe maybe even a more valuable one in the long term. MORE
There are spaces where pricing innovation is welcome, especially when there is a large, expensive incumbent. Startups are innovation machines. They identify market opportunities, develop novel products and go out to change the world. MORE
The “incumbent provider” of English proficiency tests, Test Of English As A Foreign Language (aka TOEFL), has had all of the companies and universities who accept it locked up for many years. But in some markets, incumbency matters more than better. I wrote about our portfolio company Duolingo’s English Proficiency Test back in August of last year. MORE
Incumbents became increasingly annoyed with our successes in the country’s largest market – NYC – that they started even taking out ads against us. It’s no wonder incumbents don’t want us to exist. MORE
The thesis of the book is that incumbents in markets – especially large and well entrenched markets – seldom survive fundamental technology changes in their industries. It should affect how you think if you are an incumbent but also if you’re a startup. MORE
This has massively reduced the power of incumbent banks, allowing for rapid innovation in the banking and payments sector. Here we are again in 2019 debating speech online and specifically the case of Facebook. Zuckerberg speaks at Georgetown trying to invoke the civil rights movement and to draw a sharp distinction to China. Warren quickly fires back on Twitter. Pundits everywhere weigh in. And yet hardly anyone gets to the heart of the matter: power. MORE
Can you compete in a niche where incumbents don’t care or cannot move quickly? I won a fake stock market competition in elementary school. MORE
Instead of reviewing the incumbent’s strategy, I’m going to flip these around to reverse engineer these defenses and build a startup’s playbook for disruption with examples from our portfolio. MORE
And our competitors are not really each other but the incumbent businesses that have 99.9% ” In summary: The competitors are the incumbents. This morning Clutter.io announced they raised $9 million from Sequoia , arguably the best venture capital firm that exists. Congratulations. Sincerely. Conventional wisdom says I shouldn’t tell you this because I invested in their main competitor, MakeSpace. MORE
So it’s incumbent on you to know what a smart business plan and use of cash looks like. There’s a quick litmus-test conversation any early-stage VC will have with the founder and it’s one that you should be as prepared for as your elevator pitch. MORE
This was strategic for two reasons: 1) incumbents were focused on non-perishable items, so competition was limited and 2) fruits and vegetables are lower order value, high frequency goods, which means users had a reason to use Pinduoduo regularly. MORE
As all investors know from the case of Uber, you cannot size a market based on an incumbent. Getting investors excited about your product is a critical part of raising capital. MORE
Quarterly data from Gust, the online platform for the global angel investment industry, reveals that while incumbent leaders show no sign of slowing down, new industries and areas Read more >. MORE
Given how polarizing “the stakes” can be and how critical persuasion is to winning, it is now incumbent upon politicians to improve their own dealmaking skills and to effectively communicate their positions repeatedly to their constituents. Start spreading the news, indeed. Today, Amazon announced it will entirely abandon its plans to build its second headquarters (a/k/a “HQ2”) in Long Island City, a residential neighborhood in the borough of Queens, New York City. MORE
I’ve been involved with several startups where a giant incumbent attacks you and tries to sue you out of existence. When you first receive the threat it feels like the local pizza shop when they first get a call from the local mafia boss and you can feel the shake-down coming. MORE
It’s the company that pursues an incumbent with faster, better or cheaper solution and in particular a solution that cannibalizes the incumbent’s business model typically because of a lower cost structure. MORE
They have studied their market, talking to customers and doing competitive intelligence on incumbents. Nobody can predict the future. Everybody can tell you what’s possible. The art is in knowing what’s probable. MORE
I love businesses that aim to massively reduce the costs of products or services in a way that makes a product or service vastly more accessibility and in which incumbents would have a hard time competing. I was speaking recently to the team at NuOrder , an LA-based company we’re an investor in about “realism in startups” — an impromptu talk I have given to any of our portfolio companies who ask. MORE
And incumbents desire as much of that as possible for themselves. Startups begin to siphon off important but underserved segments of SaaS incumbent's customer bases. Here are my 5 predictions for 2020. The direct listing becomes the standard way for startups to go public in 2020. The idea has been proven by Slack and Spotify, and many others will follow. Most startups at IPO have plenty of cash and don't need to raise more in the public markets. MORE
Then a large incumbent announced a new module that filled the same function as her product. #GiveFirst is a Techstars mantra. Simply put, it means giving—advice, resources, assistance, etc.—with with no expectation of getting anything specific back. MORE
Incumbents launch products, VCs throw cash at other competitors, team members quit, the economy dips — whatever. MORE
They’ll have to back up the truck for their best companies, take acquisitions off the table, and go right after the incumbents head-on. Speaking of acquisitions — many leaders of larger VC funds have privately given up on the incumbents buying their companies. Instead, they would prefer to back their winners to take on the incumbents head-on — hence, we have larger funds and longer hold periods to get liquidity. It’s an unusual time in the markets. MORE
FinTech - challenger banks, new electronic stock brokers, AI-powered investment advisors; startups are besieging the incumbents of this regulated world and assailing them in ever greater numbers. Which sectors see more startup company formation than others? MORE
The exuberant acquisition environment should enable some early-stage companies to menace their incumbents and take share, as those behemoths are distracted by M&A. Many of the most of apparent and immediate opportunities in the software market have been filled by now SaaS incumbents. About $1B has been invested in early stage SaaS startups as of November 1. Over the last nine months, marketing startups have raised more dollars in aggregate than any other segment. MORE
The conventional wisdom is to wonder if these firms are getting too big — the counterargument is equally as valid, with technology seeping into every sector and spreading across the world, and with private markets bulging, new companies are able to raise enough capital where they can directly challenge and overtake incumbents rather than waiting for them to acquire them. MORE
Today, global energy corporation Equinor and startup Crux OCM are working together to test Crux OCM’s software, which functions as an “autopilot” for oil and gas control room operators. MORE
As expected, many developers didn’t love the news that some of their work would be concentrated in the hands of a tech incumbent. Satya strikes again. After being installed in 2014 as Microsoft’s new CEO, Nadella has turned around the Seattle ocean liner on a new course after the Ballmer regime. MORE
Finding scant market demand from the incumbents whose owners prefer status quo, these startups start their own agency. In 2015, I wrote about the trade-off facing vertical SaaS companies. Vertical SaaS companies focus their efforts on a particular group of customers. Procore targets construction with their software and Veeva targets pharmaceuticals with their CRM. This concentration limits the market size, but improves product market fit. MORE
However, if you’re already an incumbent at a large health system with a compelling Covid-19 use case, then you’re in a really good spot. MORE
incumbents Related Topics TechStars
MARCH 14, 2019
Today, global energy corporation Equinor and startup Crux OCM are working together to test Crux OCM’s software, which functions as an “autopilot” for oil and gas control room operators.
500
OCTOBER 25, 2019
Conventional wisdom dictated that incumbents should focus their innovation efforts on R&D and growing their cash cows while investing in a few startups. The following is an excerpt from 500’s CVC report. How has corporate venture capital changed? In the decade since the Great Recession, we have seen digital upstarts – taking advantage of disruptive technologies from AI to IoT – reshape the economy and the corporate pecking order.
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A VC: Musings of a VC in NYC
APRIL 22, 2020
The “incumbent provider” of English proficiency tests, Test Of English As A Foreign Language (aka TOEFL), has had all of the companies and universities who accept it locked up for many years. But in some markets, incumbency matters more than better. I wrote about our portfolio company Duolingo’s English Proficiency Test back in August of last year.
Dream It
FEBRUARY 27, 2020
As all investors know from the case of Uber, you cannot size a market based on an incumbent. Getting investors excited about your product is a critical part of raising capital.
Both Sides of the Table
NOVEMBER 4, 2010
The thesis of the book is that incumbents in markets – especially large and well entrenched markets – seldom survive fundamental technology changes in their industries. It should affect how you think if you are an incumbent but also if you’re a startup.
Gust
OCTOBER 30, 2015
Quarterly data from Gust, the online platform for the global angel investment industry, reveals that while incumbent leaders show no sign of slowing down, new industries and areas Read more >.
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Y Combinator
MAY 6, 2020
This was strategic for two reasons: 1) incumbents were focused on non-perishable items, so competition was limited and 2) fruits and vegetables are lower order value, high frequency goods, which means users had a reason to use Pinduoduo regularly.
Revolution
JUNE 10, 2019
and by substantial amounts of invested capital in formal amenities required by incumbent brands that are frequently cost centers rather than profit centers (lobby restaurant, room service, etc.). Image courtesy of Mint House Real estate lies at the core of our everyday lives?—?it
TechStars
MAY 16, 2019
Then a large incumbent announced a new module that filled the same function as her product. #GiveFirst is a Techstars mantra. Simply put, it means giving—advice, resources, assistance, etc.—with with no expectation of getting anything specific back.
This is going to be BIG.
MAY 13, 2019
Using the proliferation of newly GPS-enabled mobile devices to enable taxi hailing and beat out stagnant incumbent providers was always going to be a big win for consumers. It provided a better service than existing cabs were going to be able to do for at least several years—cutting out lots of unnecessary overhead in the system. Had it been built differently, it could have been a better company and honestly I’d like to believe maybe even a more valuable one in the long term.
Both Sides of the Table
OCTOBER 22, 2015
And our competitors are not really each other but the incumbent businesses that have 99.9% ” In summary: The competitors are the incumbents. This morning Clutter.io announced they raised $9 million from Sequoia , arguably the best venture capital firm that exists. Congratulations. Sincerely. Conventional wisdom says I shouldn’t tell you this because I invested in their main competitor, MakeSpace.
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Tomasz Tunguz
DECEMBER 18, 2019
And incumbents desire as much of that as possible for themselves. Startups begin to siphon off important but underserved segments of SaaS incumbent's customer bases. Here are my 5 predictions for 2020. The direct listing becomes the standard way for startups to go public in 2020. The idea has been proven by Slack and Spotify, and many others will follow. Most startups at IPO have plenty of cash and don't need to raise more in the public markets.
Jason Calacanis
FEBRUARY 10, 2019
They have studied their market, talking to customers and doing competitive intelligence on incumbents. Nobody can predict the future. Everybody can tell you what’s possible. The art is in knowing what’s probable.
Both Sides of the Table
MARCH 25, 2016
So when Sam Rosen came to me with the idea of disrupting storage with a product that is priced cheaper than existing incumbents and he could build a product that is a better service I was intrigued. dominated by a few very large incumbents who control much of the distribution or are you going into a market that is “fragmented” where nobody controls the industry. Incumbent Strengths & Weaknesses. Many startup businesses – tech or otherwise – fail.
Haystack
DECEMBER 26, 2018
They’ll have to back up the truck for their best companies, take acquisitions off the table, and go right after the incumbents head-on. Speaking of acquisitions — many leaders of larger VC funds have privately given up on the incumbents buying their companies. Instead, they would prefer to back their winners to take on the incumbents head-on — hence, we have larger funds and longer hold periods to get liquidity. It’s an unusual time in the markets.
Tomasz Tunguz
MAY 23, 2013
It’s the company that pursues an incumbent with faster, better or cheaper solution and in particular a solution that cannibalizes the incumbent’s business model typically because of a lower cost structure.
A Smart Bear
OCTOBER 8, 2019
Can you compete in a niche where incumbents don’t care or cannot move quickly? I won a fake stock market competition in elementary school.
Haystack
MAY 4, 2019
Hello. It has been a while since I’ve posted here, nearly 3 months. My fingers are well-rested, but my writing prowess is likely rusty, so please forgive any rustiness in this post. I do plan to write a lot more this summer, so stay tuned.
Haystack
NOVEMBER 25, 2018
Airtable isn’t the only company in this collaboration space — incumbents have invested resources in “low-code” platforms, such as Google’s App Maker, Microsoft’s PowerApps, Dell’s Boomi, and Intuit’s Quick Base; other great products on the startup side include Superhuman, Notion, Front, Coda, and a few others.
Tomasz Tunguz
AUGUST 8, 2019
FinTech - challenger banks, new electronic stock brokers, AI-powered investment advisors; startups are besieging the incumbents of this regulated world and assailing them in ever greater numbers. Which sectors see more startup company formation than others?
Tomasz Tunguz
FEBRUARY 19, 2019
There are spaces where pricing innovation is welcome, especially when there is a large, expensive incumbent. Startups are innovation machines. They identify market opportunities, develop novel products and go out to change the world.
Both Sides of the Table
APRIL 18, 2019
You can’t simply drop a bunch of electric scooters in a market and hope to compete with the data and software advantages of the incumbents. The Truth About the Scooter Economy?—?An
Tomasz Tunguz
AUGUST 25, 2018
We have reached a point in SaaS where a small fraction of an incumbent is a billion-dollar company. the industry has been looking for ways to compete with some of these incumbents for a long time. I suspect old-fashioned product marketing may be the disruptive force to prise $1 billion worth of market away from some of these incumbents. Salesforce is worth $113 billion. 1% of $113 billion is $1.13 billion. ServiceNow is worth $34B and Workday is worth $33B.
Both Sides of the Table
FEBRUARY 24, 2016
Incumbents became increasingly annoyed with our successes in the country’s largest market – NYC – that they started even taking out ads against us. It’s no wonder incumbents don’t want us to exist.
Haystack
JANUARY 24, 2019
The conventional wisdom is to wonder if these firms are getting too big — the counterargument is equally as valid, with technology seeping into every sector and spreading across the world, and with private markets bulging, new companies are able to raise enough capital where they can directly challenge and overtake incumbents rather than waiting for them to acquire them.
Both Sides of the Table
MAY 27, 2016
I love businesses that aim to massively reduce the costs of products or services in a way that makes a product or service vastly more accessibility and in which incumbents would have a hard time competing. I was speaking recently to the team at NuOrder , an LA-based company we’re an investor in about “realism in startups” — an impromptu talk I have given to any of our portfolio companies who ask.
Both Sides of the Table
SEPTEMBER 21, 2016
Incumbents launch products, VCs throw cash at other competitors, team members quit, the economy dips — whatever.
Both Sides of the Table
SEPTEMBER 19, 2011
Incumbents can’t react. The reason that incumbents can’t react is that their revenue and defensibility are continued by serving the high-end of the market for which it would take too much time & money for any competitors to effectively challenge.
Haystack
FEBRUARY 14, 2019
Given how polarizing “the stakes” can be and how critical persuasion is to winning, it is now incumbent upon politicians to improve their own dealmaking skills and to effectively communicate their positions repeatedly to their constituents. Start spreading the news, indeed. Today, Amazon announced it will entirely abandon its plans to build its second headquarters (a/k/a “HQ2”) in Long Island City, a residential neighborhood in the borough of Queens, New York City.
Both Sides of the Table
MAY 28, 2018
So it’s incumbent on you to know what a smart business plan and use of cash looks like. There’s a quick litmus-test conversation any early-stage VC will have with the founder and it’s one that you should be as prepared for as your elevator pitch.
Continuations
OCTOBER 18, 2019
This has massively reduced the power of incumbent banks, allowing for rapid innovation in the banking and payments sector. Here we are again in 2019 debating speech online and specifically the case of Facebook. Zuckerberg speaks at Georgetown trying to invoke the civil rights movement and to draw a sharp distinction to China. Warren quickly fires back on Twitter. Pundits everywhere weigh in. And yet hardly anyone gets to the heart of the matter: power.
Tomasz Tunguz
JANUARY 17, 2019
Finding scant market demand from the incumbents whose owners prefer status quo, these startups start their own agency. In 2015, I wrote about the trade-off facing vertical SaaS companies. Vertical SaaS companies focus their efforts on a particular group of customers. Procore targets construction with their software and Veeva targets pharmaceuticals with their CRM. This concentration limits the market size, but improves product market fit.
Haystack
JUNE 5, 2018
As expected, many developers didn’t love the news that some of their work would be concentrated in the hands of a tech incumbent. Satya strikes again. After being installed in 2014 as Microsoft’s new CEO, Nadella has turned around the Seattle ocean liner on a new course after the Ballmer regime.
Tomasz Tunguz
NOVEMBER 6, 2016
The exuberant acquisition environment should enable some early-stage companies to menace their incumbents and take share, as those behemoths are distracted by M&A. Many of the most of apparent and immediate opportunities in the software market have been filled by now SaaS incumbents. About $1B has been invested in early stage SaaS startups as of November 1. Over the last nine months, marketing startups have raised more dollars in aggregate than any other segment.
Haystack
JULY 20, 2018
More recently, this trend has shifted a bit within the Bay Area, which today’s giants like Uber, Airbnb, and Stripe being built in San Francisco proper while incumbents down south have begun scooping up premium commercial real estate in the city. This is a post I’ve wanted to write for a long time, but I needed the time to digest all the other great posts on the topics by other investors, and to analyze specific portfolio data from Haystack over the last five years.
Both Sides of the Table
MAY 17, 2017
I’ve been involved with several startups where a giant incumbent attacks you and tries to sue you out of existence. When you first receive the threat it feels like the local pizza shop when they first get a call from the local mafia boss and you can feel the shake-down coming.
Tomasz Tunguz
DECEMBER 2, 2012
Instead of reviewing the incumbent’s strategy, I’m going to flip these around to reverse engineer these defenses and build a startup’s playbook for disruption with examples from our portfolio.
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