‘Disruption’ is nothing more than a QAnon-like cult

The puzzle for future business scholars to solve will be why Son’s capers were indulged for so long. I’d suggest that a useful clue can be found in the Softbank slides that accompanied Son’s confessional, where the word “disruption” or “disruptive” appears just once. 

For years, Son had justified his scattergun bets because those investments were “disrupting” traditional sectors. Indeed, businesses have been warned of “disruption” for over two decades now, creating a neurosis in management. Over time, the word has become so ubiquitous it has been drained of any meaning.

Let’s recap how this worked for Son, and the other Big Beasts of the Venture Capital jungle. 

Softbank’s Vision Fund would announce an apparently random and inscrutable investment in a new startup, creating an astronomical valuation. Investors and market watchers would then pore over this for meaning, for a pattern, seeking the hidden knowledge that explained how the investment fitted into the bigger “disruptive” picture that had eluded normal investors. 

The Cult of Disruption was remarkably similar to the political cult QAnon, which also resembled an online interactive interpretative game, in which people competed to find meaning. Both cults promised an eschatological Big Bang, a moment when a hidden truth would be revealed. In one instance, the Cult promised a political revolution in which QAnon’s enemies and paedophiles were jailed – in the other, market disruption and eventual domination.

Underpinning the frenzy for “disruption” are two really rather awkward facts. One will be familiar to readers of this column: for years, too much money has been chasing too few good ideas. By the time the financial crash arrived in 2008, most of the riches of the internet had been sewn up between a handful of platforms, and digitisation of the low hanging fruit, entertainment products, was largely complete. But VCs still flattered themselves that they had the power to create new markets. They had to.

“Disruptors offer a different set of product attributes valued only in new markets remote from, and unimportant to, the mainstream,” opined the venture capitalist Marc Andreessen in 2014, in an attempt to put substance on the now free floating term. “It’s a fabricated myth that disruptive innovation is about destruction,” he continued.

Wealthy investors were apparently impressed by this guff, for aside from assets like property, where does one put one’s capital? So Chinese, then Gulf money continued to trust the VCs with this mission. The Saudi’s investment fund became the biggest investor in Son’s Vision Fund.

The other factor that is inescapable is that the poster children of disruption such as Uber were founded on loopholes and lucky, often temporary flukes. Uber could take advantage of cheap auto financing and casual labour, but the basic economics of operating a taxi fleet hadn’t changed. 

As Lucy Burton argued here last week, Uber could have used the pandemic for an honest self-assessment of where its strengths and weaknesses lay, and made peace with regulators. But the cult of disruption, like all cults, is unforgiving of doubters.

In fact, genuine, game-changing innovation has been neglected in the world of magical thinking created by “disruption”. 

For example, Britain has an improbable global lead in the new field of miraculous tiny chips that amplify power and light, called compound semiconductors – you use them every time you unlock your iPhone with your face. These are critical to the competitiveness of products like electric vehicles and satellites – which are really only as good as these new wonder chips allow. They’re hard to make and copy, but we’re so blasé about this we’re content to allow China to snap up the market leader.

Contrast this with SoftBank’s backing of OpenDoor, a house flipping website which makes cash offers to home sellers, in the hope it can make a quick profit by reselling. But house prices sometimes come down, as well as go up. Rival Zillow has had to stop flipping, and is looking to shed almost $3bn of recently acquired property. Where would you rather put your money long term – wonder chips or house flipping?

“To be AGAINST disruption is to be AGAINST consumer choice, AGAINST more people being served [sic], and AGAINST shrinking inequality,” concluded Andreessen in his 2014 thread. Actually, no. Like Andreessen’s self-serving explanation, disruption was always a self-serving delusion, a weasel word that hid a thousand flops. Here’s hoping this cult, like QAnon, is over for good.

Andrew Orlowski is founder of the research network Think of X and Tweets at @andreworlowski