Writely and Word are in different markets - the market for web-based cloud word processors is very different than the one for full-featured desktop word processors. Same goes for most of the web startups that have succeeded.
Somebody is inevitably going to bring up Google, since there were established players in search when Google was founded. But at the time of Google's founding, all the established players in search thought that their business was in portals, leaving the search market itself open for a hungry competitor.
Clayton Christensen has more on this in The Innovator's Dilemma/Solution. Innovations that make things better for an established market's existing customers tend to be sustaining innovations, benefiting entrenched players. Even if a startup gets a foothold on one, they can and will be bought out or outcompeted by a big firm, which has more resources and every incentive to pour them into development.
Innovations that make things better for a new and untapped customer base, however, tend to be disruptive innovations, the sort of which new successful startups are made. The defining characteristic of disruptive innovations is that they're less profitable than sustaining innovations: therefore, at every point in time, the large entrenched competitors have every incentive not to succeed in the startup's market. Things like the PC for IBM, the web for Microsoft, free online access for newspapers, and search for Altavista.
Note that in all cases, those companies did enter the new market, they just didn't succeed in it. Because it was not in the company's interest to succeed: A success would mean that the company's overall profit is less than it started with, which is awfully hard to justify to shareholders.
I'm not entirely sure which category Tesla fits into, but I'm having a tough time seeing a $109k roadster and $57k sedan as disruptive innovations, which usually target cheaper market segments that big companies overlook as unprofitable.
I pretty much agree, just one more thing to add. Disruptive innovations are more about the market and business model than the technology itself. That's why relatively crappy inventions can take root.
For instance, PCs were not good compared to mainframes or workstations, but they were bought by people that weren't buying workstations. This gave them the chance to build businesses and improve until they could later compete with, and displace workstations.
For Tesla, what is the disruptive market? I'm not sure. Their cars do the same things as other cars, with different inputs. If their "disruptive" niche is to be an eco-fashion symbol, and that gives them time to build a car whose TCO is 20+% less because of the difference in fuel cost per mile, then they have a shot.
For what could truly be disruptive to personal transportation is Better Place ( http://www.wired.com/cars/futuretransport/magazine/16-09/ff_... ). Sure, it's expensive, limited, and poor right now, but if it can work in Israel, Denmark, and Hawaii, and prove and grow the business from there, it can change things in a much bigger way than Tesla can.
You can sell electric cars on subscription where the customers pays per km driven. That might be a disruptive business model. Some companies are already doing so.
I agree with some of your points, but I think "avoid competition / competitors' markets" is a fallacy and bad advice.
Successful companies succeed in the face of competition, and capitalize on some opportunity, which could be a technology, a market shift, a business model, or a partnership. You can often turn this "seizing a (unique) opportunity" truism into a "looking where others didn't" story in hindsight, and start getting excited about real "off the map" innovations, as if there's something inherently good about that, business-wise. In Google's case they simply came up with a better business model, though their tech strength helped.
Altavista was a search company. Google didn't succeed by not stepping on Altavista's toes in the "portal market" (which I'm sure is entirely distinct from the web search market), they just built a better search business.
Successful companies succeed by picking their competition carefully. You want to compete with firms that either don't know or don't care about your customers' use case, so that you can bring more resources to bear on this particular problem than they can.
Altavista was a search company, but in the late 90s, they didn't particularly care about search. If they did, they could easily have copied PageRank (which was published, and the patent is owned by Stanford anyway) and search ads (which were done by Overture before Google) and done as well as Google did. They didn't realize that it was a threat until Google started making serious inroads in the early 2000s, though, and by then it was too late. (Interestingly, both of the founders of Altavista ended up working at Google.)
Writely and Word are in different markets - the market for web-based cloud word processors is very different than the one for full-featured desktop word processors. Same goes for most of the web startups that have succeeded.
Somebody is inevitably going to bring up Google, since there were established players in search when Google was founded. But at the time of Google's founding, all the established players in search thought that their business was in portals, leaving the search market itself open for a hungry competitor.
Clayton Christensen has more on this in The Innovator's Dilemma/Solution. Innovations that make things better for an established market's existing customers tend to be sustaining innovations, benefiting entrenched players. Even if a startup gets a foothold on one, they can and will be bought out or outcompeted by a big firm, which has more resources and every incentive to pour them into development.
Innovations that make things better for a new and untapped customer base, however, tend to be disruptive innovations, the sort of which new successful startups are made. The defining characteristic of disruptive innovations is that they're less profitable than sustaining innovations: therefore, at every point in time, the large entrenched competitors have every incentive not to succeed in the startup's market. Things like the PC for IBM, the web for Microsoft, free online access for newspapers, and search for Altavista.
Note that in all cases, those companies did enter the new market, they just didn't succeed in it. Because it was not in the company's interest to succeed: A success would mean that the company's overall profit is less than it started with, which is awfully hard to justify to shareholders.
I'm not entirely sure which category Tesla fits into, but I'm having a tough time seeing a $109k roadster and $57k sedan as disruptive innovations, which usually target cheaper market segments that big companies overlook as unprofitable.