What will the next disruptive tech company look like? There’s no crystal ball to definitely answer this question. All an investor can hope to do is to develop frameworks which, when evaluated together, increase our odds of being correct in each of the underlying startups that we back.
Common examples of these frameworks include those we use in evaluating founders (missionary vs. mercenary founders), markets (Porter’s five forces), and the potential for financial returns (non-consensus and right).
A dimension which receives much less interest, and one where there therefore don’t exist many useful frameworks to evaluate the dimension, is that of the abstraction layer of what the next disruptive tech company will be doing. While a company’s market describes what a company is actually doing, the abstraction layer is what enables the company to do what it is actually doing.
For example, at its surface, Uber connects passengers with drivers in the inner city transportation market. However, the underlying reason why it is able to offer this service is because the passenger and driver identities and ratings available on its platform serve as layers of trust that make passengers comfortable getting into the cars of drivers, and drivers comfortable accepting passengers into their cars. So the abstraction layer description of what Uber does is that it serves as an identity and rating platform.
So the question we’re asking ourselves is what the abstraction layer of the next disruptive tech company will look like. And this is where Alex Danco from Social Capital shares a useful framework. Basically, Alex states that disruptive tech companies emerge with abstraction layers that make abundant a resource which we currently view as being scarce.
Offline trust was scarce and Uber made it abundant.
Information was scarce and Google made it abundant.
Social connectivity was scarce and Facebook made it abundant.
What’s scarce now, and who can make it abundant?