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Many legacy institutions (like Kodak) once were able to make a great living resting on their laurels. According to Yale professor Richard Foster, in the 1920s the average life span of an S&P 500 company was sixty-seven years.
¹⁴
Not anymore. Today the final three Ds in our chain reaction can disassemble companies and disrupt industries almost overnight, reducing the average life span of a twenty-first-century S&P 500 company to only fifteen years. Ten years from now, according to research done at the Babson School of Business, more
than 40 percent of today's top companies will no longer exist.
¹⁵
“By 2020,” comments Foster, “more than three quarters of the S&P 500 will be companies that we have not heard of yet.”
¹⁶

For linear-thinking companies, the six Ds of exponentials are the six horsemen of the apocalypse—no question about it. But this is not a book designed to protect legacies from exponentials. It is a book for entrepreneurs looking to harness the power of exponentials to start building new, bold legacies. For these exponential entrepreneurs, the future is not about disruptive stress; rather, it's frothing with disruptive opportunity.

In his book
Exponential Organizations
, Singularity University global ambassador and former head of innovation at Yahoo Salim Ismail defines an
exponential organization
as one whose impact (or output)—because of its use of networks or automation and/or its leveraging of the crowd—is disproportionally large compared to its number of employees.
¹⁷
A
linear organization
—like, say, Kodak—is the opposite: lots of employees and lots of physical processes and facilities. For all of the twentieth century, exponential organizations did not exist and linear companies were protected from upstart intruders by sheer size. Those days are gone.

In October 2010, a couple of young Stanford grads, Kevin Systrom and Mike Krieger, founded an exponential organization called Instagram.
Wired
magazine described Instagram as a “Shiva-the-destroyer application posing as a hipster hobby.”
¹⁸
And what was that hobby exactly? The next step in George Eastman's vision of making photography—to borrow the phrase—as convenient as a pencil.

In this, Instagram was extraordinary. Combined with the explosion of high-resolution multi-megapixel smartphone cameras, this renegade start-up completely demonetized, dematerialized, and democratized the capturing and sharing of photographic memories. Sixteen months after the founding of the company, Instagram was valued at $25
million.

Instagram Number of Users

Sources:
http://instagram.com/press
;

http://www.macstories.net/news/instagrams-rise-to-30-million-users-visualized/

In April 2012, Instagram for Android was released. Downloaded more than a million times in one day, it was the killer app for the already killer company.
¹⁹
Instagram's value shot up to $500 million. Enter Facebook.

Facebook is also in the life-sharing, life-documenting business—and they did the math. Instagram was growing exponentially. With nearly 30 million users, it wasn't just a photo-sharing service; it had become
the
photo-sharing service, with a very powerful social network to boot. Facebook didn't want the competition, and they didn't want to play catch-up. Thus, on April 9, 2012, just three months after Kodak filed for bankruptcy, Instagram and its thirteen employees were bought by Facebook for $1 billion.
²⁰

But how is this possible? How did Kodak—a hundred-year-old behemoth with 140,000 employees and a 1996 value of $28 billion—fail to take advantage of the most important photographic technology since roll film and end up in bankruptcy court? Simultaneously, how did a handful of entrepreneurs working out of the proverbial Silicon
Valley garage go from start-up to a billion-dollar buyout in eighteen months, with a little more than a dozen employees? Simple: Instagram was an exponential organization.

Welcome to the New Kodak Moment—the moment when an exponential force puts a linear company out of business. As we shall see over and over again, these New Kodak Moments are not aberrations. Rather, they are the inevitable result of the six Ds of exponential growth. And for those linear-thinking executives trying to hang on to their jobs, this leads us to three final Ds: distraught, depressed, and departed. But for exponential entrepreneurs, these New Kodak Moments are ripe with possibility.

Today, exponential technology is not just putting linear companies out of business, it's also putting linear industries out of business. It's shifting the entire landscape, disrupting traditional industrial processes—like the process by which consumer goods are invented and come to market. For the right entrepreneur, there's considerable opportunity within this disruption.

Ben Kaufman was the right entrepreneur.
²¹

Ben Kaufman was born in 1986 and raised on Long Island in New York. He was a horrible student, but also a horribly inventive student. In his senior year of high school, Kaufman decided he wanted to build a “stealth iPod”—a device that would allow him to listen to his iPod shuffle, in class and in secret, without his teacher ever noticing.

So Kaufman came home from school and built a prototype out of spare parts—mainly ribbon and gift wrap paper—proving to himself that the design would work. He also felt that other people would want one as well. But rather than be satisfied with a prototype, he somehow convinced his parents to remortgage their home and lend him $185,000 to take his invention to market. With cash in hand, Kaufman was on the next flight to China.

Once he got to China, Kaufman learned the hard way that creating a consumer product wasn't just about raising the money. “You need access to industrial design, distribution, marketing, branding, packaging . . . There's literally a list of thirty things you need to have to be successful . . . It's just
really, really
hard.”

Kaufman persevered. He founded Mophie, an Apple accessories company, and brought that initial product to market. Then, using his hard-won skills, his company delivered several dozen other Apple accessories. After that came Kaufman's next company, Quirky, the inspiration for which came to him early one morning in New York.

“I was sitting on the subway,” he explains, “and there was a woman wearing my first product, the stealth iPod I had prototyped back in high school. Seeing that made me realized that I wasn't unique in having a good idea. What was unique were all the circumstances that lined up in order for me to execute on my idea. It hit me that it wasn't just me. Invention is typically inaccessible. It's really, really hard for everyone.”

Standing in the way of invention is financing, engineering, distribution, and legalities—all the myriad quagmires that we loosely call the process of product development. So, in Quirky, Kaufman created a company whose mission is to “make invention accessible.” Or as he says: “Make it possible for all people regardless of their love, circumstances, and pedigree to execute on their great ideas.”

To do just that, Kaufman swapped out the linear for the exponential, open-sourcing the entire
process
of product development. A Quirky user simply posts his or her product idea to the site, where other users vote on its feasibility and desirability. And what the crowd likes, the crowd builds, one crowdsourced, open-sourced step at a time. This means the Quirky community will shepherd your idea from prototype onto the shelves at Target, while sidestepping all of the traditional development bottlenecks. That's also where the name Quirky comes from. “It's a weird way of looking at product development,” explains Kaufman. “We're changing the way that communities interact and what they do online together. Now they're not just finding each other and sharing things, they're actually building things.”

Quirky launched in 2009, quickly raised over $79 million in funding, and has already introduced several hundred products to market.
²²
There's a flexible power strip called Pivot Power, a collapsible clothes hanger called Solo. There are new bookcases, backpacks, cord management devices, cleaning products, cooking products, and just about anything else you can imagine. But the real difference is speed. Go back twenty-five years and the time it took for any of these inventions to come to market was measured in years. With Quirky, it takes about four months.

And unlike linear companies, whose old-world structure and processes limit their ability to rapidly introduce new products, Quirky, with a community north of 800,000, has already released over three hundred products and is currently introducing two to three new ones a week. Rather than closed-door design sessions and behind-the-scenes marketing moves, everything at Quirky is transparent, available online, and open to the public. This is to say, everything at Quirky is designed to let any entrepreneur take advantage of the amazing power of exponential organizational tools such as crowdsourcing.

And the entrepreneur should take advantage. The goal here is not to teach you how to become Ben Kaufman, it's to teach you to harness exponential platforms like Quirky, or to encourage you to create similar platforms yourself.

Consider Candace Klein, a crowdsourcing expert and the very busy CEO of Bad Girl Ventures, a company that helps women start businesses. Every Saturday night, Klein gets together with a group of women friends for cocktails. “Some of us run businesses,” explains Klein, “and some of us are stay-at-home moms, but we're all really inventive and entrepreneurial. We usually spend Saturday night talking about whatever it is we'd like to invent next. And we park these ideas on Quirky. Sometimes that takes a little work, but most of the time we're done putting the idea onto the site in about fifteen minutes.”
²³

Over the past few years, the ideas that Candace and her cocktail klatch have parked on Quirky have generated over $100,000 in revenue, a six-figure salary for work done while getting buzzed.

But that's not the whole story. Equally important is that Kaufman's success and, by extension, Klein's success, rest upon another radical shift in the playing field—a shift in scale.

In the early days of exponentials, disruptions were of the Kodak variety. Companies that made digitizable goods and services—the publishing business, the music business, the memory business, etc.—were threatened. But Quirky gives us a look at the next level up. It is no longer goods and services being subjected to the Six Ds; it's whole industrial processes. Quirky is an alternative to the entire twentieth-century product development chain—an alternative to every single step in that once hugely capital-intensive process.

And again, it's not just Quirky. Go back ten years, and hospitality and lodging was an incredibly capital-intensive business. If you wanted to build a nationwide chain of available hotel rooms you had to, well, build those actual hotel rooms. But that's not what Airbnb did.

Technically, Airbnb is a hosting platform, except that term doesn't exactly reflect the scale of disruption the company has wrought. By providing a place to post available spare bedrooms, open garage apartments, even empty vacation homes, this site allows anyone to turn unused space into a bed-and-breakfast. By mid-2014, just six years into their existence, Airbnb had over 600,000 listings in 34,000 cities and 192 countries and had served over 11 million guests. Most recently the company was valued at $10 billion—making it worth more than Hyatt Hotels Corporation ($8.4 billion)—and all without building a single structure.
²⁴

Then there's Uber, a different kind of hosting platform—one going head-to-head with the taxi and limousine industry.
²⁵
Download the Uber app and you can order a car, get information about the driver, watch the car's approach on a map, and, with your credit card already stored online, pay instantly. Yet Uber doesn't own a fleet of vehicles or manage a stable of drivers. The company simply provides a connection between people with assets (aka luxury cars) and you, the customer. In other words, by putting would-be passengers together with luxury vehicle owners, Uber cut out the middleman, dematerialized a boatload
of infrastructure, and democratized a sizable segment of the transportation industry. And fast. Four years after launching their mobile, Uber is operational in thirty-five cities, and worth $18 billion.

Quirky, Airbnb, and Uber are great examples of entrepreneurs taking advantage of the expanding scale of exponential impact. They have created billion-dollar companies in record time. They are the absolute inverse of everything we believed was true about scaling up a capital-intensive businesses. For most of the twentieth century, scaling up such businesses required massive investments and time. Adding workforce, constructing buildings, developing vastly new product suites—no wonder implementation strategies stretched years into decades. It wasn't unusual for a board of directors to “bet the company” on a new and extremely expensive direction whose outcome would remain unknown until long after most of those board members retired.