How Stock Market Investing Has Changed in the World of Tech Disruptions

In a world of constant disruption, new ideas and technology are taking less and less time to get to market,

This guest article was written by Ruzbeh Bacha who is the CEO and Founder of CityFALCON.

Today, a startup with a camera and a clever idea can create a viral video that can eat into the market share of major companies, possibly even bringing large companies down. In tandem to this trend, many big industry players are keeping a war chest to acquire smaller, creative companies. However, if the big companies react too slowly, the battle is already lost.

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The internet has spurred a new era of innovation. Like many large companies looking to hold onto their respective market shares, retail investors must be equally vigilant. The days of buying and holding stock in companies for decades and expecting steady returns are gone. Big slow moving corporate giants who may currently provide steady dividend yield are going the way of the dodo. For retail investors, you’ll need tools to help constantly monitor disruptive forces going through the market. They will help you follow your assets, and all the news related to your holdings to keep you on the top of your game.

In the world of constant disruption, new ideas and technology are taking less and less time to get to market, and investors need to take a new approach: buy companies that are constantly innovating.

Examples of disruption:

  • Dollar Shave Club – A perfect example of viral marketing. Dollar Shave Club became popular after its video went viral, and has now raised close to a billion dollar valuation. Right now, DSC has about 54% of the online market for razors, but Gillette is looking to take some of that back with its own online service. Gillette is also suing DSC for alleged patent infringement.
  • Android – Nokia’s hardware division disappeared after Android took over the world. This OS also took a huge chunk out of Blackberry, the former leader in the smartphone market.
  • Google – Yahoo has been losing significance in the search engine world for decades now. So much so that many young people may not recognize it as a search engine. Microsoft’s attempt at a search engine, Bing, failed to ever really take off.
  • SpaceX – Boeing, Lockheed, EADS have all been affected by the historic and innovative launch of the Falcon 9 rocket late last year. It could be that these industry giants will lose contracts worth millions to SpaceX.
  • Amazon – First it was books, then e-books, then retail. Since Amazon burst onto the scene, almost every retailer has felt the disruptive force of online commerce.
  • Netflix – Remember Blockbuster video? Video rental stores have almost completely disappeared, and now cable companies are starting to see fewer and fewer people renewing subscriptions. Cable companies have begun adapting, but as Netflix grows, and other streaming service popup, much of the damage is irrevocable.
  • Blue Bottle – Using Ipads to complete orders, this third wave coffee company, and brands like it, are trying to make coffee an artisan foodstuff, rather than a commodity. Blue Bottle has received massive investment and started eating into the market share of the major coffee companies.
  • Chobani – This yogurt company is worth $700 million, and by making a new product, being engaged and reactive on social media, it has taken a huge slice of the market share that formerly belonged to industry giants like Yoplait and Danone, that dominated the yogurt sector for decades.
  • Uber – Sparking outrage from taxi service companies, the sharing economy app has innovated to the point that it’s now the largest taxi service in the world, even though it does not own any of its own cars. As Uber grows, it will face more push back and more legal battles to stay afloat, but it has entirely changed the way people think of getting around town.
  • Airbnb – Like Uber, Airbnb has some legal waters to navigate. But the company has shown consumers a cheaper, easier way to stay in other cities without all the hassle of hotels.
Ruzbeh Bacha
Ruzbeh Bacha, Founder & CEO of CityFALCON.com

These are all examples of startups that have innovated their way into the market shares of long established brands, but what does the future hold? Here are our predictions for industries that are likely to be disrupted by innovative companies

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Financial services – Traditionally the financial services industry has been slow to innovate because they’ve had total control over the traditional revenue models – money transfer fees, account managing fees, trading fees and the like. But the 2008 financial crisis, and the financial sector’s response to it, has led consumers to lose trust in the long established banks and brokers.

This has created room for startups and new companies to gain that trust and improve those revenue models for the consumer, and investors will be looking to capitalize on consumers’ shifting preferences. Investment in fintech has been on the rise for years, and is expected to continue to grow. This will create radical changes in banking, investment, and everything in between – including currencies. Even the world of venture capital is changing, as crowdfunding is expected to outpace VCs this year. Fintech will shake the financial services industry to its very core, and even the oldest, most respected institutions will be forced to adapt to a changing landscape.

Social media – Twitter and Facebook feel like they’ve been at the very core of modern life for centuries now, but it’s important to remember how new both of these companies are. Twitter has been bungling the user experience lately, and failing to attract new ones. Facebook is beginning to deal with an aging user base that’s no longer cool (how likely is it that tweens will use Facebook when they know both of their parents are on it?). If a company like Snapchat comes out some time soon with a massive IPO, an innovative advertising style, and branches off successfully fulfilling the needs that Facebook has provided for the past few years, we could see an entirely new social media aura. And, as more social media platforms pop up and have the ability to create more specific and interesting products, it could be that the age of the social media behemoth will soon be behind us entirely.

Automotive sector – The automotive industry is walking along a narrowing ledge with a precipice on either side; two massive innovations are coming and industry leaders are running out of space. First it will be the electric car, which Tesla and other companies are experimenting with, that will shake the industry. Soon after we’ll see driverless cars slowly start to take over the roads. Both will force adaptation or precede the death of the big players.

Food – It might be as simple as different, healthier options for fast food. Uber Eats (or something like it) will certainly change the delivery game for many restaurants around the world. We’re already seeing start-ups aiming to make more radical changes, like growing meat in labs from a single cell, for a more ethical and environmentally friendly option for beef and pork, which would have huge implications on the nearly 200 billion dollar industry in the United States alone.

These predictions are by no means prophecies. Even the examples above will likely change over and over again before new players become established in their own right. But what’s certain is that the world is innovating now more than ever. If you’re looking to invest, there are smart ways to do it, but it will require constant monitoring and keeping up with new technology and ideas that break through at a faster pace than ever before.

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