Performing While Transforming: Disrupting as an Incumbent

PERFORMING WHILE TRANSFORMING
D I S R U P T I N G A S A N I N C U M B E N T
R I S H I D E A N @ r i s h i d e a n

THIS SLIDE MAKES ME FEEL OLD
2000
1999 2004 2011
2005 2012
2017

U N D E R L Y I N G D Y N A M I C S

A P R A C T I C A L F R A M E W O R K

H O W TO T H I N K L I K E A P I R AT E

M A R K E T D Y N A M I C S
P R A C T I C A L F R A M E W O R K
A C A D E M I C U N D E R P I N N I N G S
E P I L O G U E & D I S C U S S I O N
C A S E P R E S E N TAT I O N S / F E E D B A C K

5 Y E A R S TO $ 6 5 B VA L U AT I O N *
M A R K E T C R E AT I O N V S . M A R K E T S H A R E
6 0 C O U N T R I E S , 4 0 0 C I T I E S

AN ON-
DEMAND
ECONOMY
PLAYBOOK
Published on 4/14 by @schlaf @RRE

INCUMBENTS INCREMENTALLY OPTIMIZE
Focus on improving
existing (premium)
products
TIME
QUALITY
minimum
customer
need
sustaining innovations

THE “NEXT BIG THING” IS DISREGARDED
TIME
QUALITY
minimum
customer
need
Initially, “cheaper”, “low quality”,
“just a feature”, or “unattractive
market”
disruptive
innovations

“GOOD ENOUGH” IS THE TIPPING POINT
TIME
QUALITY
minimum
customer
need
disruptive
innovations
Eventually reach a flashpoint
where they begin eroding share–
focus and depth accelerates this

Sittercity invented the online child care category
10MM caregivers
“Demand-side” subscription model
“Matchmaking” vs. “transactional”
5MM parents

…but also created a competitor in the process

W H O WA S A B O U T TO G E T B I G G E R

CAN WE
“UBER-IFY”
CHILD CARE?
On-demand mobile services
to professionalize the
supply and to participate in
the transactional market

http://rdean.me/childcare-ondemand

EXECUTING THE PIVOT
To realize this vision, we needed to align along three primary dimensions
P R O B L E M
Defining the specific
problem to solve and
identifying the key
context & constraints
P R O D U C T
Developing the product
“hypothesis” to give us a
framework to learn &
iterate
P R O C E S S
Organizing to balance
short & long-term
priorities of the
business

P R O B L E M
D E F I N I N G T H E G A M E

2-SIDED MARKET INCENTIVES
Strategies for Two-Sided Markets, HBR ARTICLES | Thomas R. Eisenmann, Geoffrey Parker, Marshall W. Van Alstyne | Oct 1, 2006

Platform
DEMAND SUPPLY

1) Initial Adoption 1) Initial Adoption
□ Why do seekers initially adopt? Initial Adoption □ Why do providers initially adopt?
Platform
DEMAND SUPPLY

2) Same-
side
Effects
2) Same-
side
Effects
□ How do more seekers help one
another?
Same-side Effects
□ How do more providers help one
another?
Platform
DEMAND SUPPLY

3) Cross-Network Effects
□ How do more providers on the
platform drive more seekers
Cross-side Effects
□ How do more seekers on the
platform drive more providers?
□ How do more seekers help one
another?
Same-side Effects
□ How do more providers help one
another?
Platform
2) Same-
side
Effects
2) Same-
side
Effects
DEMAND SUPPLY

CRITICAL MARKETPLACE
CONCEPTS
ASIDE

D I S I N T E R M E D I AT I O N

NOT ALL MARKETPLACES ARE
CREATED EQUALLY
Despite sharing an underlying structure, marketplaces instantiations are quite different
T R A N S A C T I O N
I N I TATO R
Whether the buy-side (Sittercity),
the sell-side (EBay) are the ones
initiating the transaction
T R A N S A C T E D
I T E M
The nature of the product or
service transacted, and whether it
is a commodity or not.
M A R K E T S C O P E
Whether the marketplace is a
horizontal one (wide variety of
services) or a vertical one
(specific focus)
R E V E N U E M O D E L
Whether the revenue model is
based on subscription or a % of
transaction, and which side is
subsidized

Service Type Consideration Frequency

Service Type Frequency
Commodity Regular
Ad-hoc
Experiential
Consideration
Low
High

Commodity Regular
Service Type Frequency
http://rdean.me/marketplacematrix
Type 1:
“Uber for X”
Commodity Ad-hocType 2:
“Long-tail commerce”
Experiential RegularType 3:
“Recurring Relationships”
Experiential Ad-hocType 4:
“Delegation & Indulgences”
Commodity Ad-hocType 5:
“Big-ticket commerce”
Experiential Ad-hocType 6:
“Episodic significance”
Experiential RegularType 7:
“Trusted Advisors”
Low
Consideration
Low
Low
Low
High
High
High

H B R A R T I C L E : S T R AT E G I E S F O R
T W O - S I D E D M A R K E T S ( O C T 2 0 0 6 )
S C H L A F M A N : U B E R I F I C AT I O N O F T H E
U . S . S E R V I C E E C O N O M Y
M I T S M R : S T R AT E G I C D E C I S I O N S F O R
M U L T I - S I D E D P L AT F O R M S ( 2 0 1 4 )

A D O P T I O N : O V E R C O M I N G T H E “ T R U S T
H U R D L E ”
R E T E N T I O N : H O W TO K E E P U S E R S O N -
P L AT F O R M
D I F F E R E N T I AT I O N V S . I M I TATO R S I N A
C O M P E T I T I V E M A R K E T
K E Y D Y N A M I C S F R O M H B R A R T I C L E TO
L E V E R A G E ?

P R O D U C T
D I S R U P T I N G Y O U R S E L F - E X E C U T I N G T H E P I V O T

KEY UNCERTAINTIES
Q U A L I F I C AT I O N
Helping to provide a “softened” onboarding to new parents,
whereby there are alternate engagement points for them to
become comfortable with the service & sitters.
D I S I N T E R M E D I AT I O N
Creating an experience whereby we can provide more value
from continuing to transact on the platform than off of it.
L I Q U I D I T Y
Ensuring we have coverage of the main neighborhoods,
times, and needs with our sitter base that map to parent
needs - specifically on an initial user experience.

48
E A S Y R E U S E
Ability to see
availability of
favorites and rapid
rebooking.
L E V E R A G E
P L AT F O R M
Make use of what mobile does
well, rathe than a “port” (e.g.
location, push notifications,
messaging)
R E F E R R A L
B A S E D
Providing more
social proof behind
sitters, leveraging
word-of-mouth and
affinity groups.
I N F R E Q U E N T
U S E ?
While the parent app is great -
our preference is that they
need never open again to
transact on platform.

OPERATING IN 4 CITIES (CURATED MODEL)

P R OC E S S
D I S R U P T I N G Y O U R S E L F - E X E C U T I N G T H E P I V O T

Reluctance to sacrifice one
business for another and to
see a decline in overall
revenue
C O R E R E V E N U E
All tools, systems, processes,
and people have been
optimized for the existing
business. Additionally
incentives are likely aligned
over the existing business.
C O N T R O L S
Overcoming inertia of present
business, and ability to reverse
course to focus on something
“small” with “long term”
implications
C O M F O R T
Often the team has a lack of
precedence of how to execute
on early-stage, and
disincentives risk taking.
C U L T U R E
There is a “legacy tax”
whereby supporting the
existing business carriers
significant overhead.
C O S T O F B U S I N E S S
THE INCUMBENT’S DILEMMA
Why disrupting yourself is really hard to do — even when you know you have to.
http://rdean.me/incumbentsdilemma

The main thing is to
keep the main thing
the main thing.”
— Stephen Covey (author, ‘The Seven
Habits of Highly Effective People’)
“

CHILD CARE IS A
NATIONAL PROBLEM
T I T L E O F
Y O U R
P R O J E C T
Entrepreneurial
activities differ
substantially
depending on the type
of organization and
creativity
71% of moms work outside the home
61% of kids 0-5 yrs are cared for by
adults other than their parents
Child care is the #1 cause of
productivity loss, and lack of job
satisfaction

WHO SITTERCITY SERVES TODAY
Not Affordable
More or
less
Affordable
Easily Affordable
25% of
households
<5% of households

TOMORROW: BROAD ACCESSIBILITY?
More or less
Affordable
Easily Affordable
45% of
households

RISHI DEAN
N O V E M B E R 2 1 , 2 0 1 7
@ri shi de an
r is hidea n.co m

THANKS!W I S H I N G Y O U A H A P P Y & S A F E H O L I D AY

Performing While Transforming: Disrupting as an Incumbent

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