Diagonal Disruption

The new dynamic impacting businesses around the globe is termed: Diagonal Disruption. Normally, businesses grow vertically or horizontally. Vertical integration strengthens a business's core, while horizontal, its reach; however, diagonal growth crosses the normal growth routes and disrupts the status quo.

The digital domain has given rise to diagonal disruption. Two good examples of diagonal disruption are crypto-currencies, such as Bitcoin or Ether, and Amazon's intended purchase of Whole Foods.

Crypto-currencies are changing the way national currencies are valued and used. Start-ups are using these internet-based currencies as a path to obtain venture capital. They collect the cyber-currencies from investors and exchange them into dollars to spend on operational expenses. Many large corporations have joined the non-profit, Enterprise Ethereum Alliance, including JP Morgan, Toyota, Merck, and Samsung.

Crypto-currencies have had a phenomenal rise. Bitcoins hit a record last week, being valued at $2,600 per coin. While the value of Ethers has risen over 4,500 percent since their inception  last year.

Amazon's incursion into the mass-market food industry will drastically alter the way supermarkets will be operated and managed. If Amazon repeats what it has done to other markets it has entered, one would expect food costs to be lowered as it increases its volume - this strategy has been part of Amazon's core culture since day-one. Amazon has been looking to expand its on-line grocery business and Whole Foods' 430 stores will allow Amazon to offer curb-side pick-up of on-line orders.

We'll be witnessing more and more diagonal disruptions as time goes on as the internet, robotics, and other emerging technologies bring unseen opportunities to light. We at the FUND-HOUSE will be doing just that - looking for the diagonal disruptors to invest in.

Jim Lavorato