There’s no other way to put it. Investing in disruptive innovators over the next decade will provide you with the greatest returns.
That’s exactly why I love investing in startups.
Startups and disruption go hand in hand.
Some of today’s most powerful companies began as tiny ventures that designed out-of-this-world products or services and grew to completely dominate their markets.
But here’s the thing… disruption is actually one of the most misunderstood terms in the startup world.
It’s important to understand exactly what it means so you can secure the greatest shot at investment success.
Here’s exactly how you can find the most disruptive emerging companies out there.
What is a disruptive innovation?
In one of my favorite books, The Innovator’s Dilemma, Clay Christensen did a remarkable job defining two different types of innovation: breakthrough innovation and disruptive innovation.
And while they sound similar in name, they’re actually pretty different.
Let’s talk about it…
Breakthrough Innovation
A breakthrough innovation is one that improves upon an existing product, rather than creating a new product. For example…
The laptop created a computer you can take anywhere.
Apple’s AirPods improved on their previous headphones by removing the wires.
The flatscreen TV upgraded our old, clunky, and poor-quality TVs.
But while breakthrough innovations can be extremely useful and important, my favorite types of innovations are the ones that change the game entirely.
Disruptive Innovation
A disruptive innovation takes an existing product that was previously expensive and complex and creates an entirely new product.
This product serves the same purpose, but is cheaper and easier to use.
As a result, disruptive companies democratize their industries by offering easier access to previously out-of-reach tools, products, and services.
These companies even have the opportunity to take market share away from higher end-brands by creating higher-end products themselves.
For example…
Southwest Airlines took market share away from higher-end airlines by offering a “cheap, convenient, and easy-to-use service.” They have one type of aircraft, reduced cabin members, no in-flight meals, and lower pricing.
The Amazon Kindle Fire was developed as a cheaper alternative to the Apple iPad.
The University of Phoenix was founded as an online college offering an inexpensive way to earn a degree.
These new business models put other airline companies, Apple, and Ivy League universities into a pickle.
They’re faced with an opportunity to take market share back from these emerging disruptive innovators…
But should they put out a competing product?
Navigating the Innovator’s Dilemma
Many companies face the dilemma of whether to make better products that will be sold to the upper class and elite, or to create cheaper products that will be sold to a greater number of customers.
Selling higher-end products will likely yield bigger profit margins at a lower volume, while selling lower-quality products will likely yield smaller profit margins at a higher volume.
The real dilemma is when a high-end brand is faced with this decision.
Should Apple begin to make lower-end iPhones and tablets to compete with lower-end competitors?
Should high-end restaurants offer low cost options to compete with McDonalds and Burger King?
And should high-end car companies produce inexpensive cars to compete with industry competition?
By choosing to develop a cheaper or lower quality product, each of these companies will risk brand dilution.
But by choosing not to compete, these companies risk losing out on their market share completely.
It’s tricky dilemma that shows the true power of disruptive innovators.
Which leads me to my last point…
Why are disruptive innovations so powerful?
It’s nearly impossible for an existing company to stop disruptive innovators… and that’s exactly what makes startup investing so powerful.
It’s unlikely I’ll invest in a company that hasn’t created something so disruptive that it’s poised to blow their competition out of the water.
Right now, the most disruptive companies I’m eyeing are in the financial technology (fintech) industry.
I’ve connected with a handful of founders in this space with companies I believe will completely dominate their markets in just a few years.
In fact, I have so much confidence in these guys that I’ve invested six-figures of my own money into their ventures.
They’re currently accepting investments from the general public, but the doors won’t be open for long. One of these raises is actually closing in just a few days.
Make sure you get all the details we’re sharing in our deal analysis meeting now before you lose the opportunity.
I’m anticipating a fintech revolution with these companies, and you don’t want to miss out on these deal recommendations that come straight from the independent research team.
Neil Patel is a successful entrepreneur and investor who has been active in the startup scene for nearly two decades. Born in London, England, he moved with his family to Orange County, California when he was two years old, where he was surrounded by entrepreneurs and innovators from an early age. Neil is the founder of several companies, including Crazy Egg, Hello Bar, and Quicksprout – companies that established Neil as one of the world’s leading digital marketers. But Neil spends more time these days on the other side of the table – as an angel investor. He has made some unbelievable returns backing early-stage startups. Now, he’s here to teach you to do the same. Neil launched the Angels & Entrepreneurs Network to pull back the curtain on the world of “pre-IPO” investment, because he believes everyone should have access to the same playing field – not just society’s high and mighty.
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