Chapter 8: Uncovering the High-End Disruption Mechanism: When the Traditional Start-Up Wins

Empirical evidence indicates both superior and inferior technologies can be successfully used to launch a new firm that seriously threatens the incumbent’s sustainability. Using the traditional criteria of cost and performance to measure the superiority or inferiority of a new technology this research isolates when and why a superior technology can predictably displace the incumbent. Primary data comes from semistructured interviews that were obtained from a very successful start-up that operates in the Spanish real estate market. I use a newly designed mixed methods methodological approach both to separate the explanatory from the predictability variables and to measure their distances and relationships. A start-up can be successful using a superior technology if: (1) it uses a fully interdependent business model; (2) uses a revenue model different from that of the incumbents and; (3) exploits a distribution channel where the incumbents are either not present or minimally present. This strategy will work if the industry has these characteristics; (1) the superior technology must enable the possibility of making the start-up business model more efficient than that of the incumbents; (2) customers are currently experiencing variability when using the incumbents service; (3) incumbents disaggregation prevents them from reacting and; (4) incumbents performance has remained flat or nearly flat if observed from the point of view of the customer. This research also suggests that the limited supply of high-end customers is a limiting factor for the introduction of superior technologies. Explaining why superior technologies were more likely to succeed in the past than in the future.