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Disruption: Toward a Toy Theory of Innovation

startup toy theory

Nevermind high-tech. Instead, build a toy. At least that is an emerging idea among leading techies and theorists alike. Essentially, 'the Toy Theory' seeks to explain why the next big thing starts out being dismissed as a toy.

Consider this from Stupid Apps and Changing The World by Sam Altman:

There are two time-tested strategies to change the world with technology. One is to build something that some people love but most people think is a toy; the other is to be hyperambitious and start an electric car company or a rocket company.

In closing, I have two pieces of advice for the “arrogant fucks” who make the world go round. One, don’t claim you’re changing the world until you’ve changed it. Two, ignore the haters and work on whatever you find interesting. The internet commenters and journalists that say you’re working on something that doesn’t matter are probably not building anything at all themselves.

While the honesty in Sam's post is admirable, the toy analogy is its real strength. Because most entrepreneurs cannot afford to be hyper-ambitious, especially if they, like most, didn't already made it to series x. The toy analogy first appeared in Clay Christensen's extension of creative destruction. He argued that disruptive innovations always look like toys and that most breakthrough innovations are designed to be good enough (i.e. disruptive) rather than to outcompete competitors along existing performance trajectories (i.e. sustainable). For this reason, incumbents (competitors) tend to dismiss startup creations as toys.

As Chris Dixon argues in The next big thing will start out looking like a toy:

The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a “toy.” This is one of the main insights of Clay Christensen’s “disruptive technology” theory. This theory starts with the observation that technologies tend to get better at a faster rate than users’ needs increase. From this simple insight follows all kinds of interesting conclusions about how markets and products change over time.

Indeed, Christensen, Altman, and Dixon's take on innovation bares similarities to that of others. Elon Mush said: "good ideas are always crazy until they’re not." Consider Reid Hoffman's widely shared quote, "if you are not embarrassed by the first version of your product you've launched too late"; Eric Ries' concept of the Minimum Viable Product, "that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort"; Thomas Edison arguing that "to invent, you need a good imagination and a pile of junk"; James March's technology of foolishness; or as popularized by the french philosopher Voltaire, "perfect is the enemy of good." Historically, there seems to be some consensus about a Toy Theory among entrepreneurs, investors, academics, and philosophers alike.

Here are some examples of successful innovations that started out as toys:

  • Facebook started as a simple hot-or-not dating application on the web
  • Kodak launched its first consumer camera, transforming the photography industry by making it simple and easy for individuals to take pictures (“you push a button, we’ll do the rest”)
  • Toyota's cheap Corona model was dismissed by Detroit auto manufactures when it first hit the US market
  • eBay began by selling simple collectibles that were very difficult to trade before the Internet arrived
  • From modern telephone companies to Skype
  • Zappos and Groupon both launched with a simple WordPress website supported by manual, analogue work behind the scenes
  • In the 1970s, personal computers started out far from perfect

To this end, we all start out with toys.