Disruption is all pervasive today.
Technology is the key force behind the emergence of disruptive business models.
Old business models are declining and new ones are ensconcing themselves in the market.
But does this imply that businesses that follow these disruptive business models will make money? Well, that is a moot point.
Because, disruption and profits are two different things. Disruption is an industry-level phenomenon, while profits is a more business-specific concept.
Is it not surprising that business models such as cab aggregation, eCommerce, etc. while having disrupted the world around us in past 7-8 years, are not making much profits (esp. in countries such as India)?.
Well, it is because there are multiple players chasing disruption today. Now, just as a stock that everyone likes becomes over-valued, disruption has become an over-valued concept too!
Disruption is an over-valued concept today.
Here are the 3 basic dots I am connecting to form this insight:
- Disruption is a very appealing investment theme
- The availability of funding has been high in the past 7-8 years
- What everyone likes becomes over-valued soon