@jedidiahyueh is the author of Disrupt Or Die. Jed has invented and shipped software products that have done over $4 Billion in sales, and he has over 25 patents to his name. He also graduated from Harvard, where he was a US Presidential Scholar.
In his new book, Jed tears into conventional startup wisdom (like The Lean Startup and The Innovator’s Dilemma), as he argues most of it doesn’t hold up in the real world.
In this episode, you’re going to hear Jed’s views on Elon Musk, Google, Facebook, and a whole lot more. Unlike most critics, Jed has the resume to back up his claims. So, tune in and listen to an innovation genius speak his mind.
Listen in to Jed to learn:
- What it takes to be a disruptive innovator
- Why Elon Musk might just destroy humanity while trying to save it
- How to recognize markets that are ripe for disruption
Tell me about your first ever invention? How did that process unfold?
I was actually sitting in a coffee shop in Irvine, California thinking about some of the big trends that were happening in the data protection market at the time.
This was back in 1999 when companies used to back up the same data over and over again onto tapes.
In the consumer space, you were starting to see digital video recorders like TiVO and mp3 players. These consumer products were taking data that was traditionally recorded onto tapes and moving that data onto disk, dramatically improving the user experience in the process.
I had the idea that I could apply that same concept to the enterprise tape backup industry and have a similar impact on user experience and quality.
Once that idea came to me in that coffee shop, it was really just a matter of breathing life into it and finding the right team that could really prototype the solution the right way and then build out a product that we could start selling to customers.
“At the time, the enterprise tape backup market was roughly a five billion dollar industry, and over the next decade, we completely transformed that market.”
How did you recognize that your idea would be one worth pursuing?
I really didn’t know if it was the right idea. I never said, “This is a good idea, I need to pursue this.”
It’s really about a process I call thinking big and small.
The first thing you have to do is take a look at the overall market; for example, you could ask, “What trends are happening in the user experience space in this specific industry?” Then you have to find what I call a value seam.
A value seam is a big gaping hole that’s developing in the market that needs to be filled by the right product and the right solution.
I’ll give you an example of the first value seam that I came across.
Back in 1999, all these companies were backing up the same data over and over again on tape media. Well, I could see that the cost of disk media was plummeting on a per gigabyte basis versus tape. Additionally, tape media presented issues for enterprise companies because it’s hard to recover the exact data you want; it’s a highly fallible media.
A lot of backups and a lot of restores would fail.
I recognized that there was a big opportunity, a very big value seam opening up in this five billion dollar hardware and software market, and I took advantage of that.
Can you give an example of a value seam that you see right now?
A few months ago I met with the president of a top international bank and he mentioned that one of the biggest things they worry about today is this enormous demographic shift that’s happening with millennials.
Millennials today don’t value relationships with banks yet customer relationships are central to the power banks hold, particularly with their wealthiest clients who invest incredible amounts of capital in markets today.
But millennials just want an app. They don’t want to talk to wealth advisers, they don’t want to talk to bankers. They want to have a transaction through an app. They want convenience, and they’re willing to switch banks for that convenience.
There is this generational divide that’s changing financial services world, one of the biggest markets and biggest industries in the world.
“As millennials change their behavior and turn away from human interactions and human relationships, we’re seeing an enormous opportunity for new companies to come in and change the financial services market.”
What’s the #1 takeaway from your new book?
The world is changing very quickly and that means that anybody can be an innovator.
Many people feel like they can’t go out and build an app, that they can’t go out and start a technology company, to be honest I wouldn’t have thought that it was possible for myself either, except that I went out and did it.
The key thing to remember is that each of us has what I call the innovation glass ceiling. We believe that being an innovator, that being a founder of a software company, is reserved for the tech elite.
In reality, it’s getting easier and easier to disrupt just about any industry.
“It’s getting easier and easier to build an app that can take down enormous markets and build huge user bases.”
People forget that if you dial all the way back to the beginning of Facebook. It only took Mark Zuckerberg one week to code up the Facebook platform and put it online.
It went viral immediately across the Harvard campus because it addressed a market gap. From there, he attracted so much attention that a lot of resources and a lot of big executives, people like Shawn Parker and then Peter Thiel, came to Mark to help fuel the digital avalanche that he had created.
It’s a very small spark that’s necessary to create the right kind of innovative avalanche. You need to have the right product in the right value seam that’s emerging in the right market. If you have that, anyone can trigger that avalanche.
Do you think that Mark Zuckerberg’s success could be replicated across other industries?
Mark was clearly in the right place at the right time. There will always be value seams and prime moments for someone to fill that value seam with the right product.
Mark was there at the right moment for one of the biggest value seams in the history of mankind, or at least in the history of capitalism.
The reality is that you could still invent these products to take on new markets in almost every industry.
Take a look at Snapchat. They came to the game quite late with a very simple idea.
Evan Spiegel was with one of his frat brothers who had just sent a self-incriminating picture to a female friend and he wanted to get the picture back. Well, when he mentioned that to Evan Spiegel, Spiegel jumped up and said, “That’s a million-dollar idea.”
That’s all it took to come up with the idea for Snapchat which is now a multi-million dollar company. Even a decade after Zuckerberg built Facebook, there are still opportunities to build incredibly sized, incredibly fast-growing companies like Snapchat in the social media space.
What do you think the role of the innovator is in today’s society?
We’re seeing a lot of unintended polar consequences of recent technologies.
For example, Facebook’s mission was to connect people and bring people together, but as the platform has matured it’s actually been incredibly divisive. Facebook has created these bubbles where we’re exposed to opinions and viewpoints that we’re likely to agree with over and over again.
One consequence is that the United States is now divided into Red and Blue country on a scale that hasn’t been seen in recent years.
So, why are social media platforms like Twitter and Facebook having this incredible effect on the world around us?
The first thing to remember is that rise of the Internet and the tech companies that followed destroyed the power of centralized media.
A few decades ago, everybody gathered around their TV in the living room and watched the evening news. We had highly respected TV broadcasters who would disseminate news that was highly vetted, truthful, and accurate.
Just 20 years ago we had Bill Clinton and Tony Blair in office; centrist politics were really at the helm of the global political landscape. Yet today, we see the rise of populism.
“It’s not just Trump that we have to worry about, it’s a world of Trumps. What’s happened is the power of centralized media has been completely fractured by the Internet; what’s replaced it is the millions of voices of Twitter and Facebook.”
With all of these voices, how do you sort out which ones are going to be heard by the largest population? Well, the people who are heard are determined by algorithms or AI.
The problem is that people tend to want to hear things that they already believe. They want to read opinions that they agree with. It makes them feel good.
The combined effect is that people are divided further and further into polarized camps, and people like Trump end up in office.
It’s the exact opposite of what most tech companies set out to achieve.
Let’s look at another example, somebody like Elon Musk; he’s another person who can really have an incredible impact on the world.
He’s built amazing companies. If you look at companies like Tesla. Well, they’re trying to solve global warming by pushing out electric cars, by replacing
If you look at a company like Tesla, well, they’re trying to solve the problem of climate change by bringing electric cars to the masses. But by adding self-driving and automation features into all of their vehicles, Tesla actually makes it possible for AI to use vehicles against mankind.
We don’t know when super AI or general AI will emerge, it might be 10 years, it might be 20 years, it might be 30 years from now, but if there’s a huge population of automated vehicles on the road, AI could potentially use those against us.
“When innovators create solutions for the world, when they create their platforms, they might have an admirable goal but the unintended impacts of their technologies may actually have the exact opposite effect.”
How can we ensure future innovations benefit humankind, and don’t harm it?
That’s a great question.
Let’s take a company like Facebook. Today, they’re still using algorithms as their primary method of populating news feeds, but if you delegate this task to AI you introduce all of these unintended consequences.
If Facebook really wanted to make a difference and if they really wanted to bring back truthful news and centrism in the world, they could go buy the New York Times or they could go buy the Wall Street Journal and they could then disseminate the content from these dedicated editorial boards to all of their users for free.
The point is there’s always a solution to these unintended consequences. It’s just a matter of responding to them quickly enough so they don’t become an uncontrollable problem.
What companies are doing a good job of creating middle-class jobs in America today?
There are small companies out there today like freeCodeCamp that are teaching the world how to code for free but what we really need is the might of the true tech titans. People like Jeff Bazos, Elon Musk, Larry Page, and Mark Zuckerberg; we need them to really push these technology skills.
What else? Amazon is trying to figure out where it’s going to place its new headquarters. Place it somewhere where it can have a real impact at the heart of the American economy, in the center of America where jobs have been lost and people are getting dispossessed.
That’s where these companies can really make a big difference.
All of these tech titans, many of them are philanthropic. They spend a lot of time and a lot of money on far-flung causes around the world and there’s nothing wrong with their causes, they’re all commendable, impressive causes, but they could do a lot more to help the middle class.
Let’s talk about your book, what does Disrupt or Die address that other innovation books don’t?
Over the years I’ve read a lot of books on innovation like The Innovator’s Dilemma and The Lean Startup. They’re written by people who have studied innovation but they’ve never built multibillion-dollar companies in the past.
They don’t know what it actually means to make the lightning leap of creating an incredibly innovative product. When I read these books, they never resonated with me.
They didn’t match my own experiences as an innovator or those I’ve heard from founders of other technology companies.
For example, Eric Ries’s The Lean Startup is beset by two problems: small sample bias and the survivorship bias.
The Lean Startup has companies testing and pivoting based on a series of customer reviews. The problem is that however many reviews you do with customers, you’re subject to small sample bias.
When you have a small set of customers, you’ll never really know whether they represent the entire market or not, and that’s small sample bias.
Survivorship bias is the tendency to focus on those startups that have succeeded and not those that have failed.
There are a lot of companies that apply the concept of lean where they’re iterating and pivoting, some of them succeed and some of them fail. By looking at only the ones that survive, you miss the fact that there are tons of these other companies that iterating and pivoting and failing.
“Being lean doesn’t equal success, and it’s not necessarily the most efficient way to build a profitable company.”
In my book, I talk about the tree of innovation. There are many branches of innovation that are highly repeatable, and disruption is possible following any one of the branches of innovation.
What are your thoughts on The Innovator’s Dilemma?
It’s ironic that Steve Jobs considers The Innovator’s Dilemma to be one of the great books on innovation because he actually doesn’t follow the bottom-up disruption method presented in the book.
In The Innovator’s Dilemma, Clayton Christiansen talks about how disruptive startups form by addressing niche markets or niche segments of a market with simple products before eventually moving up-market.
But Steve Jobs took a top-down approach. For instance, the iPhone didn’t address a niche market, it went after the top of the market, and it wasn’t an inferior or simple product. The iPhone was a product that had incredible features and functions. It was loaded with technology.
The problem with The Innovator’s Dilemma is that it really only depicts a very narrow branch of how disruption occurs in the market today. There are many different ways that disrupted technologies get built today than the bottom-up approach, and many of them are highly repeatable.
“Companies, executives, and startup leaders who read The Innovator’s Dilemma are really only seeing this tiny window of what is possible in repeatable disruptive innovation today.”
What is Jed Yueh’s advice for aspiring authors?
Writing a book really is a business in and of itself. One of the things to think about is what I call the marketing rabbit hole, the digital marketing rabbit hole.
Today, marketing is becoming heavily digitized, and there are new marketing stacks that are being built continuously that authors and bloggers can really take advantage of.
As an author, it’s great that you’ve written a book, but if you really want the greatest number of people to read it, you need to take advantage of all of the methods that are available in the digital world. You need to tie together the tools that are available that will give you a disproportion advantage in pushing your product, your book, out to market.