Netflix, Apple & Tesla Beat the Giants – The Innovator’s Dilemma 🚀"

The Innovator's dilemma. When you think about companies like Yahoo, aol, Kodak, Nokia, BlackBerry, Blockbuster, where did they go and why did they fail? The innovators dilemma talks about what happens when very large companies, very successful companies, start, stop innovating and then a new disruptor comes into the market, finds a new sector of customers, and then scales rapidly and eventually takes over the incumbent. This is amazing for entrepreneurs. This is how innovation happens. This is why companies like Google and Apple and Tesla and Facebook exist, because they figured out how to disrupt the incumbents. Successful companies focus on serving their best customers all almost always, you're going to spend a lot more time focusing on the best customers that you already have and then maximizing the profits that you have with those customers. But by doing so often, you miss the indicators of innovation and the disruption that may be happening within your industry. And so there's a lot of ways that you can identify this and make sure your business doesn't die. But always at first, these new innovations, even with what we're seeing with AI today, they seem insignificant. There's a million new AI companies probably coming out every single week. How many of them are actually going to survive? Which one's going to win? At the end of the day, is it going to be Grok, is it going to be Azure, is it going to be Gemini, is it going to be open AI? Who really knows? But at the end of the day, we're still in the very beginning phases of these new technologies. And you can see that originally Google kind of dropped the ball by not releasing Gemini before Chat GPT, they probably already had it built out. They could have launched a few months earlier. Even though the first product was kind of trash, they still would at least been in the question. But OpenAI got a huge head start, generated billions of dollars in revenue, and got millions of customers. In that time when Google was lagging behind, waiting. And so disruptive technologies start as weaker, cheaper and niche alternatives, which big companies ignore. But over time, these innovations improve, attracting new customers, attracting new revenue. And they become good enough that they'll completely replace the old technology, leaving the established companies behind. So let's talk about a few examples of this. The first one, Blockbuster versus Netflix. If you go back and look at the corporate headquarters or all of the Blockbuster jets, Blockbuster was living lavishly, renting out DVDs and VHS and, and they completely ignored streaming, which was the worst decision because they don't exist anymore in 20, 25 years ago, Netflix CEO Reed Hastings walked into Blockbuster's headquarters With an offer, buy Netflix for $50 million today. I'm pretty sure they do like 40 billion a year in revenue and are worth billions, like hundreds of billions of dollars. And they have over 260 million customers worldwide. Blockbuster actually laughed Reid out of the room 25 years ago. At the time, Blockbuster had 9,000 stores, 6 billion in revenue, and a monopoly on the movie rental industry. Meanwhile, Netflix was just this small DVD by mail company. But because they ignored the streaming side of Netflix, their once business model evaporated. No one uses VHS or DVD anymore. Everything you have is streamed and, and all the videos you're going to have, you're going to put up on the cloud and you're going to have them in an instant access at your fingertips at all times. This is one of the biggest flops ever in the history of business. Was Blockbuster missing out on streaming? When innovation comes knocking at your door, take the time to pay attention to it. Another really good example is Kodak. I think they still make those single shot cameras that you can go and get printed out. But at the end of the day, this company has fallen off a cliff. It's a story of one of the greatest business ironies in history. In 1975, Kodak actually invented the first digital camera. But instead of embracing that, they buried it. Because they could make billions of dollars selling the film that they had. They were selling Kodak film. And for decades, instead of using and building a better camera, they focused on film. They were the king of photography. And in 1996 they had 16 billion in revenue. And today, I don't actually know. I'm pretty sure Kodak is facing bankruptcy. So if you don't disrupt yourself or you see these leading indicators of what could come. Kodak could have made the iPhone easily with a better camera from day one and they completely ignored that. I don't understand how they did this. Another great example here is Nokia, the number one phone maker in the world. The early 2000s, Nokia dominated the phone market. Everyone remembers the little Nokia brick phone with like the, you know, T9 and you had to triple click on a button. They had over 50% of the market share. In 2007, when the iPhone came out, they were making half a million phones a year. They had 75 billion in revenue. Then Apple launched the iPhone. And Nokia executives strongly believe that a smartphone was just a niche product. They completely dropped the ball within six years. By 2013, Nokia had went from 50% of the market share in mobile phones to 3%. In 2013, I believe they sold to Microsoft for pennies on the dollar of what they were actually worth today. Apple was the first $2 trillion business to ever exist. The iPhone alone does 200 billion a year. Imagine being a Nokia executive when you find out you sold your company for pennies on the dollar because you missed that opportunity. We could also talk about Tesla, how they picked a really niche market of electric cars when they launched in 2003, and they chose to focus on a luxury sports car. That's how they actually got their first handful of sales. Now, I think they're the biggest automaker in the entire world. But the lesson from this is that disruptive innovation often looks like a joke. No one was going to take luxury sports car that doesn't even burn gas and think it was going to become literally the most valuable automobile brand in the entire world. And that's Tesla, because, well, Elon at the end of the day is disrupting everything that he touches. So how do you keep an eye on these innovative dilemmas that are going to come up throughout your entrepreneurial journey? The biggest mistakes happen when companies ignore small emerging trends. Just because something's small today doesn't mean it's going to be small in the future. So you have to keep an eye on emerging trends. One of my favorite tools online is called Google Trends. You can just go and see what's trending within your industry, what's growing, what's popular, how much people are searching it, where they're searching it, and you can learn a lot about what trends are happening in what industries. Number two is you should always be experimenting, even if it is detrimental to your business. Good friend of mine, Trent Kitsch, wildly successful, used to always tell me how they always had pirate projects. Pirate projects were one or two individuals on the team that went and focused deep on something that was completely different or innovative within the business. We used to give like free Fridays once a month where anyone could work on any project that they wanted just to keep building, keep testing, keep experimenting, and always be learning. You never lose in business. You either win or you learn. That's the only takeaways I can give you. You either win or you learn. You don't fail. And then step number three, you gotta disrupt yourself before someone else does does. I just gave you some classic examples of how These businesses were 100 disrupted, lost all of the value in them, and became worthless at the end of the day because they were disrupted. So you want to launch quickly. The Gemini example, missing out on tens of billions of dollars in revenue just because chat GPT launched first. So the innovators dilemma is why great companies fail. And if you want to survive in business, you got to spot new trends, be willing to disrupt yourself, and never assume your success will last forever. I'm going to say that one again because I think it's so important. Never assume your success will last forever. One of my biggest lessons from selling my company for eight figures and watching the 12 other companies that were my Techstars cohort with me in Boulder was that you can never believe that the level that you're at is the top level. You need to keep going, keep growing. One thing Grant Cardone always says is just like and I'm amazed at his productivity levels. But the reason that he can be in his late 60s or 70s, however freaking old he is, he looks great and keep doing as much as he's doing and keep growing is because he's pushing himself every single day. He doesn't feel successful enough yet. Neither do I. That's why I'm doing this. So if this video helped you, I would love for you to join the everyday entrepreneur in our communities. And if you Every week we just chat about new things, entrepreneurship, these new videos that I'm publishing, and you can leave a comment below and pretty much learn everything about me. Thanks for tuning in.