Anshu Sharma's comment on my recent post led me to think whether Wall Street always rewards companies who lead disruption. I can cite two cases, both on either ends of spectrum.
Amazon is an example of how a company can be punished by Wall Street for trying something disruptive such as their webservice offering of S3, EC2, and Fulfillment by Amazon. Quoting article from businessweek.com:
All that has investors restless and many analysts throwing up their hands wondering if Bezos is merely flailing around for an alternative [S3, EC2] to his retail operation. Eleven of 27 analysts who follow the company have underperform or sell ratings on the stock--a stunning vote of no confidence.
Investors want consistent profit growth and a company investing in disruptive offering (like Amazon investing in S3 and EC2) eats away the profits in the short run. This doesn't gel well with investors and punishment to stock price is eminent.
Apple, on other hand, with its iPod and iTunes has been successful in disrupting music industry's business model (selling individual song as against to album), while still keeping investor's confidence in the company resulting in a healthy stock price. It is successfully changing its strategy from a computer company to consumer electronics company.
On Wall St., it seems like simplicity of disruption matters. If disruption is simple enough, it helps investors (and masses in general) understand and appreciate its significance. Even if disruption is not simple enough, its complexity has to be hidden behind a simple concept that masses can relate to. It is easier to appreciate the impact of Apple's iPod+iTunes than Amazon's S3+EC2. Though, in my opinion, both are equally disruptive in their respective segment. However, both seems to be getting different treatment on Wall Street.
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