Explaining digital disruption - a simple comparison

New business models based on scale-able software platforms and cloud based servers are disrupting business.  To illustrate the development speed and leverage of these new businesses, let's compare WhatsApp with Vodafone. We all know what Vodafone (a conventional telecom company) does, but for most of us it is our kids / grandkids who know about WhatsApp.

WhatsApp is a mobile phone texting service using internet connections and so replaces conventional SMS texting.  After being in existence for only 5 years it was bought by Facebook in 2014 for an astonishing US$19 billion.  Let's compare Vodafone and WhatsApp in 2014:  

The comparison is staggering.  Vodafone is a global giant with a 23 year history.  Yet the start-up WhatsApp hit the same number of customers in 5 years.  Even more unbelievable is that WhatsApp had only 50 employees - Facebook's $19 billion purchase price was equal to $345 million per employee.  The value per employee for the traditional telecom company was a little over $1 million.  That is not just an evolution of a business model - it is a complete transformation.  That is digital disruption....

John Berry

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