The Toy Theory and Disruptive Innovation

Why you should be in the toy business

Nevermind high-tech, build a toy instead. That is at least the emergent idea among techies and theorists alike. ‘The Toy Theory’ is looking to explain why the next big thing starts out being dismissed as a crazy, embarrassing toy.

Consider this from Stupid Apps and Changing The World by Y Combinator president 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 A. The toy analogy first appeared in Clayton Christensen’s work. He argued that disruptive innovations always look like toys.

Now, consider this phrase from The next big thing will start out looking like a toy by Chris Dixon:

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.

The above ideas are somewhat in line with Elon Musk’s mantra that “good ideas are always crazy until they’re not.” Or Reid Hoffman’s famous quote, “if you are not embarrassed by the first version of your product you’ve launched too late”. Or Eric Ries’ Minimum Viable Product concept; “that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.” Or as once popularized by the french philosopher Voltaire; “perfect is the enemy of good.”

There seems to be some consensus about the “Toy Theory” among entrepreneurs, investors, academics, and philosophers alike.

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

… to this end, we all started with toys.

Originally published at torgronsund.com on June 14th, 2016 (edited).

Doctoral research fellow and asst. professor, Digital Innovation, University of Oslo and Iserv Computing. Twitter @tor