Peter Diamandis Talks About Disruptive Adjacencies

October 26, 2015 – The best example I know of disruptive adjacencies is the evolution of mobile phone technology. Today a smartphone is more than the sum of so many technologies – a camera, a music and video player, a calendar, a phone, a messaging service, a browser, an administrative assistant, a game platform and a home to tens of thousands of applications. With every new function added to smartphones an adjacent industry is put in peril. In Peter Diamandis’ latest email blast he talks about “how to identify and develop disruptive adjacencies.”

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1. FACEBOOK Disrupts SMS MESSAGING: Facebook decided to disrupt SMS messaging with the launch of Messenger. Because Facebook is a platform, they have been able to garner 700 million monthly active users globally which is expected to drive a projected 38% decline in Telco SMS revenue in North America by 2017.
2. TESLA Disrupts ENERGY STORAGE: Tesla, an electric car company, is disrupting energy storage with the Tesla Powerwall. They used the technology developed for their cars to branch into this new $19 billion market.
3. GOOGLE disrupts MOBILE PHONES: Google is an Internet search company. But in 2008 Google got into the phone hardware business, shipping Android and beginning the disruption of mobile operating systems. Android currently commands an astounding 82.8% market share.
4. AMAZON disrupts EBOOKS: Amazon started as a company selling physical books, but saw the shift towards e-books. By 2010, the Kindle accounted for 62.8% of all e-readers worldwide. Amazon is now the leader in the promotion and sales of digital content in an e-book market worth $1.62 billion annually.
5. NETFLIX disrupts CONTENT STREAMING & CREATION: Netflix transitioned from mailing DVDs to video streaming over the web. It’s now a $41 billion company. Now they are shifting again, aiming to disrupt original content production with Netflix Originals.
6. UBER disrupts FOOD DELIVERY: Uber is exploring how to disrupt the food delivery market with UberEATs. In 2015, the food delivery market is estiamted to be worth $70 billion annually with merely $9 billion happening online. With a fleet of over 14,000 drivers in New York City, distribution and recognition threatens to shake up GrubHub‘s hold.
7. LINKEDIN disrupts RECRUITING: LinkedIn disrupted the corporate recruiting market worth $26 billion annually by launching “Talent Pipeline” in 2011 (now known as Recruiter). LinkedIn had been making money from advertisements and job postings, and then launched a subscription to tools for recruiters to generate leads. Recruiter now accounts for 62% of their revenue in 2015, up 36% from last year.
8. RED BULL disrupts PUBLISHING: Red Bull, an energy drink company (they’ve sold 50 billion cans), launched Red Bull Media House to produce original sports, culture, and lifestyle content. It has since become one of the world’s leading premium content media companies.
9. FUJIFILM disrupts COSMETICS: Fujifilm, the camera company, is disrupting cosmetics. It turns out that of the 200,000 chemicals used in Fujifilm’s core business, 4,000 are antioxidants that could be used for cosmetic purposes. The brand, called Astalift, has been on the market for about five years.
10. APPLE disrupts MUSIC PLAYERS: Apple is notorious for disrupting adjacencies. In 2001, after Apple experimented with music application iTunes, they realized there was no good MP3 player on the market. So Apple created the iPod – selling over 300 million of them. Then they dematerialized their own technology by implanting it into an adjacent market, the iPhone!
11. GOOGLE, APPLE, UBER & TESLA disrupting CARS & DETROIT: I would not want to be a Detroit car executive. These four Silicon Valley tech companies are investing billions in autonomous cars to disrupt how we drive.
12. FACEBOOK, GOOGLE, SPACEX, VIRGIN/QUALCOMM disrupts COMMUNICATION: Today these companies are looking to provide 1 Megabit per second connectivity to every person on the planet, potentially disrupting the global communications infrastructure. SpaceX alone is looking at launching 4,000+ satellites to accomplish this. Google is launching thousands of balloons, and Virgin and Qualcomm are launching 648 satellites through OneWeb.

How to Identify Great Adjacent Markets

Believe it or not, finding great adjacent markets is pretty straightforward. Here are three questions to ask:

1. How could my company’s underlying assets be used differently to solve problems that a) impact a billion people and b) you are passionate about?
2. Who in your supply chain is doing an awful job, and can you see yourself doing a better job by developing that business?
3. What else do your customers need? Where are they underserved, and how could you solve their problems?

When you answer these questions, you will be able to identify lucrative adjacent markets and begin on the path toward disrupting others and disrupting yourself.

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Can you think of other disruptive adjacencies happening in science and industry today? If so, please comment and I’ll write about them.