John Ruffolo, the CEO of venture capitalist firm OMERS Ventures, is set to present the keynote talk at Marketing Evolution Summit (MES) Sept. 30, a brand new event for C-Suite marketers hosted by Marketing magazine and MDC Partners.
Ruffolo’s talk, titled “If You Have a Billion Dollar Business, I am Here to Disrupt You,” will be somewhat antagonistic, as he argues that an industry only needs one disruptive startup (Uber, Amazon, etc.) to threaten the profits of incumbents and turn traditional business models upside down. Billion dollar brands, beware.
Ruffolo spoke with Marketing ahead of his talk at MES. The following interview has been edited and condensed.
Is the market still dominated by incumbent companies, but shifting towards innovators and disruptors?
For the most part, but I would say we’ve moved from a phase of “All these start-ups are coming, and are going to disrupt you,” to “They’re actually doing it.” The reality is becoming clearer. Certainly the numbers haven’t shifted that dramatically, but the level of activity that’s going on and the impact that it’s having, it cannot be discounted. That’s the whole point of this thesis, is that if you were still hoping that it was going away, and it was only a fad, you’re dead wrong.
Which industries are racing against the clock?
All of them. The two that I’m picking on here very specifically, and it’s not because they’re more ramped for disruption than anywhere else, is financial services and retail, just because I was picking a couple that [OMERS Ventures] spend a lot of time in. But we’re seeing them in all areas.
Every pitch [to OMERS from startups] is: We’re building this because we’re going to disrupt X and Y in industry Z.
How many pitches in a year catch your interest?
We get about 2000 a year. We see about 300. We have diligence where we actually do a deeper dive on about 30. And then we’ll invest in five.
Even with a small number of pitches getting through, you still see evidence we’re in an age of mass disruption?
Correct, because we’re picking just the crème de la crème, but there’s thousands of VCs in North America. Now multiply that. So now you’re looking at something like $27 billion that went into startups in North America this year. That’s a lot of money in a ton of companies. And the vast majority of them will fail. But the ones that don’t, really truly become the disruptors.
So using the example of the taxi industry – it’s become Uber, maybe Lyft and Halo, there’s only a few. But when they win, they crush. It just takes one or two to get through. That’s all you need.
What do the successful disruptors have in common?
They’re not encumbered by the legacy that the incumbents have. If you’re going to disrupt the retail store industry – so, Amazon – the advantage is, all the other stores have this massive investment in real estate that’s very expensive. Amazon has optimized their supply chain so much, that Walmart hasn’t figured out a way to outflank them, but in fact are encumbered with this massive real estate cost.
It seems we’re witnessing something important and historical right now
I would say yes. Why now? We are witnessing the intersection of three massive forces all at the same time, not seen from a technology perspective at least in my lifetime. It’s the intersection of cloud, mobility and social. And some would say a fourth is big data. What you’re seeing is all of these transformative forces all coming at the same time, and all of these forces have allowed these small [companies] to compete against big, capitalized, well-established players. That’s the difference.
Check out the full agenda for the Marketing Evolution Summit, happening September 30th in Toronto, here.
