Example of A Disruptive Business

From a business and investment perspective, the most interesting businesses are those that are disrupting their industry by totally destroying the pricing models.

Usually, the talk is about digital delivery pushing the price of bit-based products (e.g. music, information, or movies) towards $0. But, it really becomes interesting when disruption happens in mature industries dealing with physical products.

Here's a stunning example - Zenni Optical. They are destroying the pricing structure for eyeglasses. They can offer a high-quality pair for much less than their competitors can touch. In fact, according to this article on Zenni Optical, they can offer eyeglasses for as low as $8!

They have three advantages:

1. They deal directly over the internet with retail customers, and rely primarily on word of mouth from satisfied customers.

2. They take advantage of a "flat" world and contract out manufacturing to high-quality labs in lower-cost countries.

3. They only carry their own line of frames.

Zenni isn't for everyone. They are not right for people who want designer frames or one hour delivery. Since their labs aren't local, it takes time before your glasses can be delivered.

However, these people are probably not Zenni's targeted demographics. They are going for people who put a priority on good quality, but low priced, eye wear.

This is an example of the free market at its best because they are making money by satisfying a need and helping an under-served market.

We usually think of companies like Google as revolutionizing the world - not a maker of eye glasses. But, while it's true that Zenni isn't changing the whole world, they are probably impacting many individuals - such as a low income student who will now succeed at school because he or she can now afford glasses. Down the road, if this person becomes a doctor or scientist, then society will have benefited.