Game Changing
30 June 2015

Game Changers: lessons from startups which changed the game

Talent, risk, and investment can be the holy trinity of any startup’s success. These three concepts have been masterfully merged by some companies in recent years. In doing so, they have not only managed to create new ideas but have also established a revolutionary model, changing the rules of their business sector forever.

Some entrepreneurs and investors have formed their companies into spearheads of change.

Revolutionary sharing-economy.

Uber changed transportation rules in 2009. The banning of  the service in some countries (including Belgium, the Netherlands and Spain) demonstrates how its ‘ridesharing’ concept has sparked controversy wherever it has been introduced. The company’s size proves that it is here to stay: it is trying to attract between $1.5 billion  and $2 billion (€1.3 billion and €1.8 billion million respectively) in a new funding round. This would raise its valuation to $50 billion (€44 billion), making it the highest valued startup of recent years, falling behind only Facebook.

Airbnb is also facing legal challenges at the same time as it gets ready to close a funding round that would value the company at $24 billion Dollars (€21 billion). Moreover, its model of collaborative accommodation is already being emulated by startups like Homeaway or Wimdu.

This sharing-economy is unstoppable —it has also reached logistics with crowdshipping through companies such asJwebi, Sheaply or PeerShip, thanks in part to its orientation towards scalable markets and cutting out middlemen. Higher trust and lower cost are two of the fundamental factors in the success of sharing economy projects that have allowed them to revolutionise a wide range of markets.

Streaming, or how to change audiovisual distribution for ever.

Many incumbents do not trust innovative ideas from game changers, and when they start doing so, it is often too late. Reed Hastings, an engineer from Silicon Valley, offered Blockbuster a joint project: Netflix. Whilst Blockbuster ended up bankrupt, its online counterpart has exceed its market capitalisation as it expands into more and more countries with Italy, Spain and Portugal now in its crosshairs. Netflix is competing with traditional distribution models with in-house series like House of Cards usurping the television boxset and Crouching Tiger 2 being released simultaneously on the internet and in cinemas.

The main global music streaming service was not born in California but in Stockholm. Spotify, founded in 2008, is now valued at over $8 billion dollars (over €7 billion euros), with over 20 million paying subscribers. It has been such a revolution that its founder Daniel Ek was described by Forbes as ‘the most important man in music.’ iTunes and Napster had already taken the first steps, but Spotify revolutionised the sector by making millions of free songs available and paying record companies royalties. Now, the company has decided to try its luck with video and podcasts to continue expanding the business.

Fintech, revolutionising online banking and mobile payments.

Jack Dorsey —Twitter co-founder and interim CEO after Dick Costolo’s resignation—came upon the idea that in coming years our wallets will be gradually replaced by our smartphones. Accordingly, he launched Square, a mobile payments application, that might see smartphones become the new cash registers.

If Square revolutionised mobile payments, Lending Club has revolutionized credits skipping traditional banking by linking investors’ money with individuals and companies in search of funding.

Lending Club’s founder, Renaud Leplanche, first put this idea into practice and, despite a brief blip for legislative reasons in 2008, it is now one of the largest peer-to-peer online credit platforms. Valued at over $6.5 billion (€5.7 billion), Lending Club’s entry to the stock market  a few months ago was the biggest technological offering in the United States. This goes to show that creating an alternative to traditional banks with lower rates for borrowing can be a profitable idea.

Fintech is developing at a high rate, and CircleUp, an equity crowdfunding platform through which investors invest their money in consumer businesses and innovative retailers, are similar examples of success.

Health on your wrist.

Taking care of ourselves no longer takes place solely in medical centres and gyms ever since the appearance of disruptive startups like Fitbit. Fitbit’s tracker combines the roles of personal trainer and health consultant, measuring parameters including burnt calories and the quality of sleep. It has already sold over 20 million devices. The company has just gone public on Wall Street with an initial valuation of $4.1 billion (€3.6 billion), becoming the third most important stock market debut of the year on the New York trading floor.

Monitoring has become ever more fashionable, and our life and health habits will increasingly depend on the devices we carry with us. Jawbone Misfit and Garmin are other companies that have embraced wearables, a sector that could grow an annual 35% for the next five years.

As a popular meme that spread on Twitter some weeks ago put it, “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening”. The game has already changed in some sectors – now the question is which one will be the next.