Disruptive vs. Incremental
An admittedly reductionist but helpful way of thinking about new company creation is disruptive vs. incremental innovation. The way you build each company is fundamentally different, but a lot of company building advice applies only to incremental innovation. Therefore, distinguishing between these two types is a useful exercise, as it helps inform whose advice you should listen to.
As an entrepreneur, there is no right answer of which type of company to pursue initially, but the world would be a far better place if serial entrepreneurs pursued disruptive innovation after building financial and social capital.
Disruptive
- Alters the trajectory of human progress
- Often market & technical risk
- Often software and hardware
- Uncharted territory: No or very few established playbooks
- Zero to 1 improvement (10x gains)
- Mission-driven
- For humanity
- Works backward from a concrete vision of the future
- Differentiation as a feature; monopoly as the goal
- Requires long-term, patient capital
- Inspires others to do more
- Legible to few in the beginning
- Originated from first principles
- Tackles an unsolved, civilizational-level problem
- Navigates unclear or evolving rules; may need to shape policy
- Requires rare cross-disciplinary talent
Incremental
- Immaterial to human progress
- Neither market or technical risk
- Often hardware or software, but not both
- Charted territory: Well-established playbooks to grow the company
- N to 1 improvement (1x gains)
- Mercenary-driven
- For the individual
- Rides the zeitgeist wave
- Little differentiation and highly competitive
- Attracts short-term, flighty capital
- Inspires no one
- Legible to most in the beginning
- Built by analogy or derivation
- Tackles a solved problem with diminishing returns to effort
- Operates within established regulations
- Fills conventional roles