Incumbent and Insurgent: Adding Value Together

TechStars

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.

The Future of Corporate Venture Capital

500

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.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

The Duolingo English Test

A VC: Musings of a VC in NYC

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.

How To End Your Pitch with Your Vision

Dream It

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.

Understanding How The Innovator’s Dilemma Affects You

Both Sides of the Table

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.

The Market Diversifies: International Innovation Captures Larger Share Of Startup Funding Applications

Gust

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 >.

Pinduoduo and The Rise of Social E-Commerce

Y Combinator

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.

The Future of Hospitality is Here

Revolution

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

#GiveFirst In Action

TechStars

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.

The Uber that Never Was

This is going to be BIG.

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.

What To Do When Your Competitor Gets Funded?

Both Sides of the Table

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.

5 Predictions for 2020

Tomasz Tunguz

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.

How to Predict the Future (Don’t)

Jason Calacanis

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.

How to Decrease the Odds That Your Startup Fails

Both Sides of the Table

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.

Opportunity Amid Volatility

Haystack

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.

A Startup’s Guide to Maximizing Last Mover Advantage

Tomasz Tunguz

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.

Capturing Luck with “or” instead of “and”

A Smart Bear

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.

Mapping The Haystack Portfolio Across The United States

Haystack

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.

The Breakout Tech Company Of 2018

Haystack

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.

Which Categories of Seed Startups are Thriving? Which Aren't?

Tomasz Tunguz

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?

Should Your Startup Differentiate On Pricing?

Tomasz Tunguz

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.

The Truth About the Scooter Economy?—?An Insider’s Perspective

Both Sides of the Table

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

1% of Salesforce's Revenue Makes a Unicorn

Tomasz Tunguz

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.

MakeSpace Raises an Additional $17.5 million and Unveils Strategy to Make Public Storage the Next Blockbuster Video

Both Sides of the Table

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.

Bites At The Apple, Sharpshooting, And Shots On Goal

Haystack

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.

How I Invest

Both Sides of the Table

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.

Why I Backed a 24-Year-Old Trying to Assess Human Potential

Both Sides of the Table

Incumbents launch products, VCs throw cash at other competitors, team members quit, the economy dips — whatever.

Why Reed Hastings Should be Applauded for Netflix Split

Both Sides of the Table

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.

Amazon “Swipes Left” On New York City

Haystack

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.

How Much Should You Raise in Your VC Round? And What is a VC Looking at in Your Model?

Both Sides of the Table

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.

Facebook and Speech: It’s All About Power

Continuations

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.

The AI Agency - A Novel GTM for Machine Learning SaaS Startups

Tomasz Tunguz

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.

Quickly Unpacking Microsoft’s Acquisition Of GitHub

Haystack

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.

Trends in Early Stage SaaS Fundraising Market of 2016

Tomasz Tunguz

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.

Investing Outside The Bay Area

Haystack

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.

The Surest Sign You’re Winning is When Goliath Takes a Swing at You

Both Sides of the Table

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.

Startup playbook: reverse-engineering Clay Christens’s market disruptions

Tomasz Tunguz

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.