Inside Techcrunch Disrupt

September 20, 2014

My piece published in the Wharton Journal.

Silicon Valley is obsessed with itself. On one hand, this is for good reason: the region has arguably driven all meaningful new economic growth in the United States in the past 50 years. On the other hand, as the region’s eponymous HBO show has captured so brilliantly, the self-promotion has become comically overblown. Last week, the Semester in San Francisco cohort dove headfirst into the heart of the hype machine: TechCrunch Disrupt.

At Disrupt, three major themes were writ large: signs of a bubble versus true innovation, the growing impact of Uber on everything, and how new platforms enable hobbies to turn into jobs.

First, the conference attempted to clarify what disruptive innovation truly means. The term’s creator, HBS professor Clayton Christensen, asserted that such innovation requires a causal mechanism. For him, ideas like disruptive innovation are overused by people who don’t think about the phenomenon behind the idea. Christensen noted that “everybody hijacks the word disruption to justify what they want to do in the first place”. Unfortunately, this concept was entirely lost on the TechCrunch moderator who was busy “disrupting” the panel discussion.

Still though, the question persisted: where is the bubble today and where is the true innovation? Most agreed that near-zero interest rates were bringing new investors to tech, inflating the valuations of later stage startups. But true innovation was harder to identify. To keep it simple, the next wave of productivity and value creation is coming from banking and higher education (Christensen), privacy commerce (Mark Cuban), “atoms instead of bits” (Peter Thiel), decentralized care delivery (Elizabeth Holmes), unbundling complexity in finance (Max Levchin), prototyping (Liam Casey), and machine learning and artificial intelligence (Vinod Khosla). Too easy!

Second, Uber everywhere. Uber. Everywhere. The conference began with Founder and CEO Travis Kalanick demonstrating the polish of someone who had been expertly coached by, say, a top political advisor. Maybe he got a few pointers from new hire David Plouffe, campaign manager for Obama ‘08. Anyway, Kalanick seemed poised and ready to take on the biggest questions facing his $18 billion company. These include drivers cancelling rides, competition in China, and product developments like Uber Pool.

Uber was on everyone’s minds. Thiel criticized the company’s recent tactics in a fierce battle to sign-up new drivers. He suggested Uber’s new slogan should riff on Google’s classic “don’t be evil” to yield “do a little bit of evil and don’t get caught”. A panel of venture investors chose Uber as their top pick of companies not in their portfolios. Sherpa Ventures launched with a new $150 million fund based on its investors’ track record - principally their unrealized Uber investment. Khosla discussed the next phase of Uber’s impact, as it begins to displace car ownership for some people. It’s clear that this is the company of the moment.

Third, the conference demonstrated the power of new marketplaces to empower users to turn their interests into real businesses. Danny Rimer, Partner at Index Ventures, observed that millennials expect a social commitment and are looking for companies that have a social impact as part of the business model. For him, these companies are likely to be the most successful. In Index’s portfolio, this includes Etsy, GoodEggs, and Patreon, where customers want to help makers, farmers, and artists, respectively, turn a passion into a vocation.

Other companies which utilize a version of the new marketplace model include panelists Airbnb (creating community anywhere), DoorDash (enabling small businesses to offer delivery), and Eventbrite (connecting people with events). As Christensen has said, disruptive innovation is about creating connections that could not exist otherwise. These startups clearly illustrate that principle in action.

In the midst of all the bubble talk, the Uber-ification of everything, and the power of new marketplaces, what are we left to believe? Without a technology version of Nate Silver to help cut through the noise to find the signal, how can we understand what’s next?

As Pure Storage CEO Scott Dietzen said in probably the least attended panel of the week, “the beauty in tech is that the missionaries end up making more money than the mercenaries”. True to its roots then, you’re more likely to find the best new companies in Silicon Valley not at a glitzy conference or launch party, but out of the spotlight in a nondescript apartment or garage.