Disruptors or Nuisance?
Aug 27, 2021
When we talk about a company being disruptive, we’re talking about a company that’s figured out a better, cheaper and more efficient way of doing things. Those efficiencies and cost savings are passed to customers and forever change the competitive landscape. Amazon did it and changed the retail market forever. But what about the companies that come in, displace the existing leaders and leave the landscape for the worse?
A few years back, we began seeing competitors move in on the cable TV market. They offered slimmed down packages of channels at substantially discounted prices from what the big players in the space offered. You could add some channels a la carte if you wanted. There was no contract so you could cancel anytime. Companies like Hulu, Fubo, Sling, YouTube TV, etc. came in and disrupted the market.
Fast forward to today and the disruptors now charge virtually the same price as their cable competitors. Want 4K? That’s extra. Want an entertainment package? That’s extra. If you use a service like this, you do still pay month to month and there’s no equipment to contend with, but if price is your concern, these alternatives are no longer particularly attractive.
When Uber launched, they offered on demand car service. Need a ride? Just launch the app, order a car and you’re off. Not only were the cars nicer, but the prices were cheaper too. Just like the cable disruptors though, a few years later and the prices are comparable, if not higher, than a cab. Drivers aren’t showing up as quickly as they once did. Yes, the cars are usually nicer, but you’re paying for that.
That leaves us with a question about disruption. Is disruption truly disruption if things go back to how they were? Is YouTube TV really a disruptor with their subpar picture quality, annual increases in price and scaled down package of channels relative to traditional cable companies? Is Uber a disruptor or just a more expensive, less reliable cab?
If you’re aiming to disrupt a market, you need to change it for the better. That should apply to both consumers and investors. Create a new and better way of doing something that lasts. Increase efficiency that reduces costs, improves user experience and makes money for investors along the way. That’s true disruption. Introducing a new way of doing things that ultimately changes nothing isn’t disruption, it’s just a nuisance.
Written by Dylan Ratigan and Josh Fabian
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com.
tastytrade is a trademark/servicemark owned by tastytrade.
tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”).
tastyworks, Inc. (“tastyworks”) has entered into a Marketing Agreement with tastytrade (“Marketing Agent”) whereby tastyworks pays compensation to Marketing Agent to recommend tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastyworks. tastytrade is the parent company of tastyworks. tastyworks and Marketing Agent are separate entities with their own products and services. tastytrade has different privacy policies than tastyworks.
Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.