Innovation is the lifeblood of the economy, driving progress and creating value for society. Disruptive innovation, in particular, has the potential to transform entire industries and revolutionize the way we live our lives. Investing in disruptive innovation can be a high-risk, high-reward strategy, but those who do it well can reap significant benefits. In this article, we'll explore the benefits of investing in disruptive innovation, and gain insights from Jeremy Abelson, a successful entrepreneur and investor who has made a name for himself by investing in companies that are pushing the boundaries of what is possible.
What is Disruptive Innovation?
Disruptive innovation is a term coined by Harvard Business School professor Clayton Christensen in his book, The Innovator's Dilemma. It refers to the creation of a new market by introducing a product or service that is significantly better than existing alternatives, resulting in the displacement of established competitors. Disruptive innovations often start out as niche products, but over time they can expand to capture a larger share of the market. Examples of disruptive innovations include Uber, Airbnb, and Netflix.
Why Invest in Disruptive Innovation?
Investing in disruptive innovation can be a high-risk, high-reward strategy. On the one hand, many disruptive startups fail to gain traction, and the vast majority of venture capital investments do not produce returns that justify the risk. On the other hand, successful investments in disruptive innovation can generate outsized returns, creating massive wealth for investors.
Jeremy Abelson is one investor who has made a name for himself by investing in disruptive innovation. He founded Irving Investors in 2009 after two successful exits in the digital media space. Irving Investors is a long-term, research-driven investment firm that focuses on sustainable investments in the public and private markets. Abelson believes that investing in disruptive innovation is essential for creating value and driving progress in society.
The main benefits of investing in disruptive innovation
One of the main benefits of investing in disruptive innovation is the potential for significant returns. Disruptive startups often have a small initial market, but if they succeed in disrupting the industry, they can quickly capture a large share of the market and generate substantial revenue. For example, when Uber went public in 2019, it had a market capitalization of $82 billion, despite not yet being profitable.
Investing in disruptive innovation also allows investors to be at the forefront of technological progress. Disruptive innovations often rely on cutting-edge technologies and business models, and investing in these companies can provide insights into emerging trends and opportunities. By investing in disruptive startups, investors can also support the development of new products and services that have the potential to improve people's lives and solve important problems.
Abelson emphasizes that investing in disruptive innovation requires a long-term perspective. Disruptive startups often take years to develop their products and build a customer base, and it may take even longer for them to become profitable. Investors who are patient and willing to wait for the long-term potential of disruptive startups can reap significant rewards.
Conclusion
In conclusion, investing in disruptive innovation can be a high-risk, high-reward strategy, but those who do it well can reap significant benefits. By investing in disruptive startups, investors can potentially generate significant returns, be at the forefront of technological progress, and support the development of new products and services that have the potential to improve people's lives. As the experienced investor Jeremy Abelson has shown, a long-term perspective and a research-driven approach can increase the likelihood of success when investing in disruptive innovation.
