Is there a reliable, scalable, repeatable process for creating disruption?
We believe there is. After 19 years of studying disruption at Apple and the Boston Consulting Group, we are putting our beliefs to the test.
We present a theoretical model for how to create disruption, and a business model we have designed -- and are currently executing -- to validate that model in real-world circumstances.
The goal nothing less than democratizing the means of disruption in order to make it available to individuals and industries hurt by past disruptions. This in turn will enable the disruption of startups culture, venture capital, and software industry itself. Including us!
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The Last Startup: Our Quest for a Process to Disrupt Everything
1. THE LAST STARTUP
HOW THE SWAN FACTORY PLANS
TO DISRUPT EVERYTHING – INCLUDING US!
January 2015
2. Ernest Prabhakar
Studied Physics for eleven years
S.B. MIT, 1988
Ph.D. Caltech, 1995
Studied Disruption for nineteen years
Boston Consulting Group, 1995 - 1997
Apple Product Marketing, 1997 - 2014
4. Disruption
“Disruption happens when the strong are defeated by
the weak. More precisely it’s when those with
unconstrained access to resources have them taken
away by those with minimal or no resources.”
– Horace Dediu, Christensen Institute
http://www.asymco.com/2014/06/25/the-disruption-
faq/
5. Why Disruption Matters
“To be for disruption is to be for consumer choice,
for more people being served, and for shrinking
inequality.”
– Marc Andreesen, a16z
https://twitter.com/pmarca/status/539828973413228
545
6. The Hypothesis
Can we design a
repeatable, scalable & reliable
process for creating disruption?
7. Scarce Resources How To Get More
1 Novel Perspectives Recruit for Diversity
2 Idealistic Founders Hire for Values
3 “Simpler” Technology Appify Development
4 Bootstrap Market Relaunch Continuously
5 Courageous Capital Invest Internally
9. 100 Days Ago
Left Apple after 17 years
Eyewitness to the most amazing turnaround in
computing history.
Launched The Swan Factory, Inc.
Self-funded for three months to test my
hypothesis
10. 1. Recruit for Diversity
Dr. Ernie, Overall Amy, Investors Dr. Andrew, Educators
Joe, OnlineWhitney, Collaboration Audrey, MediaDavid, Documentation
Daniel, Programmers
11. 2. Hire for Values
Apple Christian Fellowship
The “Swanifesto”
Bring the Kingdom of God to Humanity via
Transformational Work
Bring Programming to Humanity via Meaningful
Experiences
Humanity: Relationships, Listening, Trust
Programming: Inspiration, Iteration, Preparation
Meaningful Experience: Initiate, Lead, Share
12. 3. Appify Development
Experts Amateurs
Category Tool Product
Adoption Taught Learned
Focus Mechanics Concepts
Format Language Dictionary
13.
14. 4. Relaunch Continuously
Fast Cycles: 1 Month Research + 3 Months Development
Oct 1 - Dec 10, 2014: Hour of Node
Dec 27 - Mar 27, 2015: Self Service Kiosk
Simultaneously pursue multiple potential “exits”
Client contract with other startups
Standalone “cash cow” business
Asset acquisition to existing companies
15. 5. Invest Internally
Scale horizontally by bootstrapping more teams
Manage excess profit via next-generation
democratic processes
Tithe 10% to non-profit holding core IP
Save 10% to internal “bank” for new ventures
Give the rest back to shareholders
17. The Ask
$600K over two years
$100K per iteration
So we can take equity in promising startups
instead of paying clients
Goal is to become self-sufficient in two years
Ideally never need venture funding or IPO
Generate cash from spinoffs and joint ventures
18. Disrupt Everything
Startups / Software Industry / Venture Capital
Capitalism / Politics
Work / Culture
Us!
Success is making ourselves obsolete
This slide is carefully designed to scare away anyone who does not like big, crazy ideas.
Our dream is to radically simplify the process of launching a scalable technology business, to the point where nobody else has to suffer the uncertainty and isolation that most people consider an intrinsic part of what it means to be a startup.
I view the world as a scientist. I have been trying to figure out business and disruption for 19 years. Apple was an amazing laboratory for that. We’re now trying to take that to the next level with The Swan Factory.
Lean Startups are all about creating hypothesis to test. We are taking on the biggest hypothesis of all.
Disruption happens because incumbent producers obsess over a particular definition of value, which ends up overshooting what customers actually wants. A new entrant can redefine the basis of competition to something they can improve on more quickly, and eventually overtake the incumbent.
This is not just about making money. It is a moral imperative if you believe the future ought to be better — and different than — the present. This is Robin Hood innovation.
To be sure, that innovation comes at a cost. Our goal is to make the process of disruption available to those hurt previous disruptions.
If so, it is easily worth a trillion dollars.
I believe we have at least a 1% chance of finding one.
Break out of your existing worldview and social circles in order to see new problems or reconceptualize old ones.
Date for looks, marry for trust (not easy to do across cultural boundaries).
This IS the secret sauce of The Swan Factory — a vastly cheaper way to create a minimum viable product.
This is just hard. So do it more often. Embracing pain is how we learn what others can’t.
We need a liquid market in mission, values, and people. Existing markets are broken. So we have to create our own.
Nice sounding theory. How do we find out if it is true?
I believed in this so strongly I quit the best job in the world at Apple in order to put my theory to the test.
No titles; only “Stewardship” of a particular Experience.
- 4 Continents, 5 Countries, 6 Time Zones
- Half Women, Half People of Color
- Half Paid, Half Volunteer
- Diverse Backgrounds, Industries, Platforms
The only reason we were able to pull this off is because we had a core team that shared certain values, which we demonstrated and documented to a wider group that didn’t necessarily share that worldview.
The reason I could not do this at Apple is because they (rationally) viewed programming as a tool for experts. I saw it as a potential app for amateurs.
The theory I developed over four years to support this is the core Intellectual Property behind The Swan Factory (available upon request).
We validated the theory by developing the Hour of NODE — in 70 days, from scratch, with a brand-new team and technology. This is the first new paradigm for learning programming 20 years.
In only an hour, we can give 10-year-olds an intuitive experience of modern event-driven programming, including:
run loops
refactoring
code quality metrics
interrupt handling
develop-test-debug-deploy
This technology and culture allows us to iterate extremely rapidly with multiple product cycles and business models.
We want to refine the theory in situ by trying it out in the real world with real customers, not by creating academic papers or corporate demos.
In the 21st-century, companies should grow wide rather than deep.
The key is a self-giving, self-consuming center than still maintains moral continuity, enabling the agility of a decentralized network with the decisiveness of a central authority.
This implies we need to “stay hungry / stay foolish.” Rather than building a war chest (that could easily make the center fat, dumb & happy), we should rapidly give back excess cash so we have to justify new investments to a broad community of trusted stakeholders.
See ZeroMQ Collective Code Construction Contract and Deliberative Democracy for examples of next-generation decision making.
What would it take to pull it off? What can you expect if we do?
Now that our 3 month experiment is over, we are looking for a minimum of $100K in funding or ongoing client work to keep it going.
We believe we can bootstrap the entire project over six iterations, for a total cost of $600K over two years.
The business is designed to NOT retain cash, but reward shareholders so much they will gladly give us more if we need it.
The goal is to teach disruption to the world. Which means our “children” could — should! — disrupt us. We are okay with that.
If somebody copies us and puts us out of business by doing it better — it means we’ve won!
We live to die.
We die to live.
We are The Swan Factory. That’s how we roll.
Interested in learning more? Drop us a line at:
- info@theswanfactory.com
Twitter: @TheSwanFactory
https://www.linkedin.com/in/drernie
Thanks for your time!