Silicon Valley Study Tour

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This is the Forum for the attendees of Padova and Verona University to get the chance to attend to the Silicon Valley Study Tour 2016- august 22-26.

Discuss the attach article, tell your thinking, share yr ideas and links.

End of May we'll ask for your Cv...and will judge the best to come with us!

http://singularityhub.com/2015/10/26/12-industries-disrupted-by-tec...   

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Even if a lot of Diamantis examples are fascinating, because they embody the real Silicon Valley epic, the entire concept of a single company or a little bunch of companies that disrupt an entire industry is a fictionalized and romantic approach.
A completely new industry is never build by an epic hero nor disrupted by a lone ranger.

Let's see some examples.

Facebook disrupts SMS messaging.
Facebook is not disrupting the SMS industry at all. Instead WhatsApp, Telegram, Viber, SnapChat... are doing the dirty work. FB took note and bought WhatsApp in 2014 because its Messenger wasn't good enough for the users. But the SMS market is under attack from several sides and since many years. Just think about the constantly decreasing cost for bandwidth and the spread of the mobile phones. Facebook have nothing to do with this.

Google disrupts mobile phones.
Google didn't disrupt the mobile phones market alone.
Let's think about the evolution of this particular industry.
The first mass smartphone device was from Blackberry. They decided to target the corporate people and they get them all. Did it disrupt the previous cell phone market? No, Blackberry create a new one, next to it, it created its private little niche.
Then Apple and Google, starting from Blackberry experience, decided to expand the smartphone market and targeting the normal people, consequently disrupting the cell phone market. Did they do all that alone? Nope. Both needed a compelling service, some external resources and a lot of help to be successful. The compelling services were the two app stores, Apple store and Google Play. Apple needed thousand of external developers for its app market to attract millions of users, Google needed app developers too and HW producers because Google hasn't build a single mobile phone for years, and, don't forget that, an existing and working OS (Android was from Andy Rubin not from Google). Besides remember that the Android phenomenon is not a single parent son, because their guardian angels are the Open Handset Alliance members: Intel, HTC, ARM, Motorola, LG, Samsung.

Google, Apple, Uber and Tesla are disrupting cars and Detroit.
Really? And why did Google make a deal with FCA to build its auto driven car? FCA with its Chrysler subsidiary resides in Detroit. Maybe the reason is that they are not able to build a car from scratch. Can this strange box be defined a car in your opinion? https://www.wired.com/wp-content/uploads/2014/05/early-vehicle-lore...


IMHO the market is never wildly disrupted by a single Chuck-Norris-hero-company but it's constantly changing and evolving day by day. It's the general context that leads the change more then a single subject. It is the push of hundreds of companies, along with universities and governments that makes the change possible.
Then one of those company can create a better product, or a better advertised product, or the most attractive packaging for its product, or a viral product, or simply can have a fluck, and we think that the entire "disrupting process" was the consequence of a single action, a single subject, a single product. It's rarely true, most of the time it happens in movies and novels not in real life.

The big companies today act as project collectors and sometimes as ventures. But they rarely are the trend setters. They ride the waves of innovation along with hundreds of other subjects but, since they are seated on a mount of money, they can absorb the most promising surfers.

So these are my final beliefs.
The innovation comes from the people not from the big companies.
The disruption of adjacencies is always accidental and never planned as well as the disruption of entire industries.
The opening of a new industry branch is never a caused by a single agent but it's a complex market effect.

Disruptive innovations tend to be produced by outsiders. The business environment of market leaders does not allow them to pursue disruption when they first arise, because they are not profitable enough at first and because their development can take scarce resources away from sustaining innovations (which are needed to compete against current competition). A disruptive process can take longer to develop than by the conventional approach and the risk associated to it is higher than the other more incremental or evolutionary forms of innovations, but once it is deployed in the market, it achieves a much faster penetration and higher degree of impact on the established markets.
From https://en.wikipedia.org/wiki/Disruptive_innovation

First of all, I would say that Diamandis’ article is very interesting and worth to be read.

He says that “businesses must disrupt themselves to survive” and this is especially true in recent years. As a matter of fact, almost 40% of the companies listed in S&P500 have been removed during the past 10 years. Probably, those companies were not really good in disrupting themselves.

In the article, it is written that the most successful companies “disrupt adjacencies" and some examples are provided. I would say that this behavior is just another way to pursue growth leveraging existing assets. To some extent, I agree with Gianluca N.

Facebook disrupts SMS messaging.

Facebook was the biggest social network in the western world. However, its mobile presence was inadequate. In that period (2014), as pointed out by Gianluca, the cost of bandwidth was decreasing and the number of smartphone users was overcoming the number of desktop users. In my opinion, the acquisition of WhatsApp was just a tool to pursue growth over the following years.

Amazon disrupts e-books and Netflix disrupts content streaming

These cases are quite similar. Both of them changed the business model to leverage their existing assets in fast-growing markets. Amazon was also clever to provide a low-cost e-book reader. According to me, this strategy is quite similar to the Razor-Razorblade business model.

Uber disrupts food delivery

In this case, it is clear that Uber leverages existing assets. This company has thousands of drivers  willing to bring people around (or whatever else) to be paid. Basically, Uber is just giving them something else to do.

Without providing other examples, we can say that most of the companies presented in the article are just leveraging their existing assets to expand in fast-growing markets. This strategy is pretty interesting but it is nothing new.  It is just a way to pursue growth.

Having said that, I disagree with Gianluca when he says “Disruption of adjacencies is always accidental and never planned”. As presented before, Uber chose to enter the food delivery market as well as Netflix chose to enter the content streaming market. It is clear that most of the companies are willing to grow. When they are not able to grow in their existing market they need to find new markets. When this happens, most of the time it is disrupting for incumbents in that markets.

A company that could disrupt an adjacent market is AirBnB. It could simply enter the rent market for offices with the same business model and probably would obtain a discrete success.

In conclusion, I would say that established businesses are better in expanding in adjacent markets. The presented strategy consists in leverage existing resources and enters unexplored markets. Therefore, they are not really disrupting themselves. Startups are better in pivoting and disrupting themselves in order to find a sustainable and scalable business model. 

@Lorenzo

You say "Without providing other examples, we can say that most of the companies presented in the article are just leveraging their existing assets to expand in fast-growing markets".

This is a good analysis because, in a way, you are telling us that the entrance in an adjacent sector is a natural expansion for the companies to better use current unused or partially used resources (skills, money, customers loyalty).

But isn't it a partial confirmation of my assertion?

When I say that "the disruption of adjacencies is always accidental and never planned" I exactly intend that a company can be in a condition to fill a gap near its core business and, OK, this isn't accidental neither unplanned, but that its final aim, the disruption itself, could be successful or not.

I'm not saying that entering a close market is accidental or unplanned, I'm saying that the disruption of that market is a random effect. The actual disruption could happen or not, nobody has enough power to decide to unbalance a market and surely be successful.

Some examples.

Think about the Google attempt to disturb the Facebook hegemony in social network. Is anyone remembering something called G+?

Again think about the first Microsoft attempt to disrupt the smartphone market with its Windows RT. They were coming from the WinCE, that was a de facto standard for previous mobile devices (palmtop), but they failed the same. So they closed the project and opened a new more promising one (Win 10).

Think about the Nokia transition to the smartphone with its Symbian OS that caused Nokia totally missed the train. Nokia was a monopolist in cell phone market but failed the same to disrupt the adjacent market.

Going back we can remember the IBM example. IBM successfully moved to an adjacent market, from mainframe and minicomputer to microcomputer, with its PC, but was not successful in the transition because the PC market went out of their control. We have a different lesson here: a successful disruption that almost totally destroyed its author.

The point is that it's not important how many resources you have, but when you enter a new market, closed or far from your core business, your success is never granted.

The point is that it's not important how many resources you have, but when you enter a new market, closed or far from your core business, your success is never granted.

I agree Gianluca but:

in the Silicon Valley- more than in anyother part of the World the ecosystem permit to create a giant from nothing...like happened in the last decades...with acceleration in the  last 2 ( from Google birth...today) When you grow such a way you have huge $ to face new challenges and complete your garden.

I have a personal ( but widely told) convinction about cars: Silicon Valley will be the core of the car industry  in a 10 years  ( no more Detroit, Torino, Stuttgard)...true that Google is approaching FCA...but in the challenge I think that for the future to be completely new from this market ( Tesla) will be the winning choice...let's see in a few years.

The ecosystem is very important and in Italy it is not well developed. Generally, I would say that the European ecosystem is less developed, with several exceptions. London and Berlin, for instance, are two important hubs. However, it is known that the amount of investments in European startups is still lower when compared with their peers in SV.

For what concerns cars, I think that Google did a wise action. In my opinion, cars will be commodities in the near future. As a consequence, it will be more important to own the software rather than the “hardware”. In addition, we can notice a specific trend. Both Google and Apple are trying to expand their existing ecosystem in another industry, which is the self-driving car industry.

Tesla is also an interesting case. It is also relevant that the company provides most of its patents publicly. Probably, Tesla wants other companies to build electric vehicles in order to become the main supplier of batteries. Indeed, Tesla is building an ecosystem in the energy-storage industry (Just think of Tesla Powerwall). 

Are you really sure that the cars market will be absorbed by the Silicon Valley companies?

Are you really sure that the automotive innovation will come only from the Silicon Valley?

Lorenzo's idea is that cars will be a commodity in the near future.

Why Lorenzo?

Cars are not computers neither phones.

Let's see the historical data. Cars aren't decreasing in size, in raw material needed to build them (metals, paints, energy, plastics, tissues, liquids), in final prices, not even in time taken to build one of them... in 1914 a Ford Model T required 93 minutes to be assembled (https://en.wikipedia.org/wiki/Ford_Model_T#Production). Today a modern car requires about 20 hours.

It means that probably we won't see in the automotive area the same unusual evolution we had in the electronic field. I agree with you that the software is becoming more and more important even for cars, but probably we as end consumers won't buy a car for its software only. A car is its engine, its design, its performance, its comfort, its price, its brand and... its software too.

IMHO you can have a self driving car but it can't be like the Google beans tin I linked before, or it can't costs 1.000.000,00€, or it can't have an autonomy of 50km, otherwise you won't reach the selling number needed to survive.

In a similar way Paolo's idea is that the Silicon Valley will become the automotive industry core in ten years.

I don't agree with this approach at all.

Why do we all speak about the Silicon Valley ecosystem and when we consider a different industry we completely ignore the need for a peculiar ecosystem too?

The automotive industry needs a galaxy of different companies, activities, skills, infrastructure, selling networks, to reach the purpose.

How can the Silicon Valley enter in this market with only its software know how? It could be possible in one hundred years, not in ten. Again a car is not a computer is something different.

In my opinion it is easier that the entire Silicon Valley automotive industry will be absorbed by the car industry than vice versa. Silicon Valley automotive will become a supplier for the big car industries. So in the future we'll continue to have Toyota, GM, Volkswagen, Hyundai, Ford, FCA.... Probably they'll start to produce electric or hydrogen cars, probably their cars will be self driving, maybe some of them will disappear leaving space for new companies. Tesla? Probably yes. Google? Surely not. The Google guys are only the best to advertise their experiment in self driving car but they've produced zero cars until today... only some prototypes. Probably we will find the Google brand in a little sticker on the steering wheel for a future Chrysler car, not more.

I have some questions for you.
Is it possible that the real innovation in automotive will not be in the accessories (the self driving pilot, the augmented reality driving assistant, the IOT, are no more than cars accessories) but in the production field? What do you think about the 3D printing for the automotive? This will surely scare the automotive industry.
https://3dprint.com/111644/3d-printing-revolutionize-auto/

Or maybe the innovation will be in a new way of cars fruition... Did you hear about the P2P car sharing? Probably the P2P car sharing has more chances than the Silicon Valley to make the automotive industry collapse
http://bigthink.com/endless-innovation/is-car-sharing-the-future-of...

very cool article...just about disruption and actions...not to be disrupted   https://www.garyvaynerchuk.com/uber-airbnb-never-should-have-happen...

agree totally the last :

no drive, no oil, no property ...the future ( already started...) ...but this for sure will disrupt the Torino Detroit Stuttgard story...with many other different players ( maybe not all in SV...but the coolest pot is there )

Your points are really interesting.

Nonetheless, if you think of cars as they are now, you may say they are not commodities. Of course, this is true. However, if we consider sharing economy and self-driving trends (as you present later), in the long term people will need something to move around. Something like this: https://www.google.com/selfdrivingcar/

In my opinion, this is a big toy rather than a car. What Google needs is knowledge. Actually, it has no knowledge about OEM plants, how to run a supply chain in the car industry and so on. As a matter of fact, new ways to use cars are very relevant and potentially disruptive. I completely agree with your ideas about P2P and car sharing.

On the opposite side, luxury cars are very different and design, engine and performances will be still relevant.

(By the way, if you allude to assembly time, you should know that Ford produces vehicle in 90 minutes: http://corporate.ford.com/innovation/100-years-moving-assembly-line...)

For what concerns the price I think that it is too early to provide expectations. As they present in the following articles the price might be significantly lower:

However, the entire concept of self-driving is  still limited to some functions.

 

“How can the Silicon Valley enter in this market with only its software know how?”

A good answer to your question is Tesla. Its only plant is located in Fremont, CA. It is not that far from SV and it is brand new. It produces cars which are partially self-driving.

In conclusion, I would like to thank you for your point on 3D printing. This is really interesting and probably it opens new frontiers for smaller plants located in many places.

I think that companies must disrupt themselves if they want to survive in this continuously changing market in which time is one of the principle actor. Time is, in fact, one of the variables that is shrinking the lifespan of companies nowadays. In recent projections this is considered roughly 18 years instead of 60 years tenure in a projection of the middle 90's.
Now it is obvious that if companies concentrate all of their resources on their core business they will fail quickly. They will not able to follow the market trends.

Some firms in the past believed that (at that time) emerging technologies were not be the one who would have train the market in the future. This is exactly what happened with Kodak (delisted from NYSE in 2012). They didn't pay enough attention to the new digital camera that was moreover discovered in their own laboratories in the 70's.

Now companies are more conscious about this possibility and this is why they tend to divide their structure: one part for the existing business, and the other for the emerging business.
They have either inside projects, like Big G with its GoogleX project where the developed, by the way, Google Glass and self driving cars, or they invest money buying other companies or financing new start-ups, like Facebook with Wathsapp.

So, in my opinion, the matter is not regarding these new companies that disrupt someone else market, but why the companies that held the 'old' technology didn't innovate their products before.

Regarding the discussion about the cars I also agree with Paolo when he says that maybe in less than a decade we will find the core cars industry in the Silicon Valley. In less than 10 years there will be an huge amount of electric cars sold and the one (companies) who think that this future is still too far it will be left behind.

Hi Marco.

I completely agree with you. As I asserted before the disruption of competitors is accidental and it is not the primary goal of a company. And you are right, the innovation is the only opportunity for a company to survive, especially in a fast changing world as ours, but, in my opinion, the innovation alone is not enough to survive.

I think you already know how many big companies tried to innovate and poorly failed.

One for all is IBM.

They introduced the PC and didn't understand its potential leaving the leadship to MS. Yes they failed to understand that the HW is becoming a commodity while the real value was becoming the SW. When they understood that they abandoned the server PC line and then the retail PC line. Lenovo purchased the former IBM lines and has become the first PC seller worldwide. But IBM couldn't be in a dying business because they are innovator by definition, so they went into the cloud services. What a sin that the cloud services are becoming a commodity too and IBM itself is slowly dying because they don't know where the successful innovation is.

This is the most famous example I know of a company that tryed hard to disrupt itself and instead destroy itself.

A further question on cars. Sorry I'm still focusing on automotive because it's one of my preferred topic. I see you all agree with the 10 years deadline for the current car industry in favor of the future Silicon Valley car industry. But the innovation I'm seeing in Silicon Valley is not different from the innovation I'm seeing in VW, GM, Nissan... All the automotive companies are working on a self driving car project since many years (https://en.wikipedia.org/wiki/Autonomous_car). Why will the Google car be so better to destroy for example the VW car? Why will Tesla destroy a traditional cars company like Nissan that is already producing and selling an hybrid SUV? Why won't the future be in hydrogen cars instead of electrical one? Just in case the winner will probably be BMW that is experimenting with hydrogen cars since years.

So the question is: why the innovation in SV is better than the innovation outside there?

I would like to highlight that not all that glitters is gold. SV is one of the most innovative places in the world. Most of the startups that find a repeatable and scalable business model have an impact on people lives. However, I would like to know what do you think about Theranos case. (http://www.wsj.com/articles/at-theranos-many-strategies-and-snags-1...)

Is it an isolated case?

Should we expect fewer investments in the near future?

Is it a sign of a bubble?

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