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Two By Two Fri, 27 Jun 25 |
An abridged, narrative version of the latest episode of Two by Two, The Ken’s premium weekly business podcast. |
“Your duopoly is my opportunity”—India’s third-place challengers. Meesho, Rapido, and Zepto are out challenging established market duopolies
| 3 min read |
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Disruptive innovation.
It’s a buzzword that pops up almost every time something exciting comes along in the startup world. It is also a term that is often misused; even Harvard Business School professor Clayton Christensen, the man who coined it, has by now clarified what “disruptive” in this case actually means:
1. “Disruptive innovation” does not necessarily apply to every industry in which newcomers make the incumbents stumble.
2. “Disruption” specifically refers to what happens when the incumbents are so focused on pleasing their most profitable customers that they neglect or misjudge the needs of their other segments.
3. The disruption happens when the newcomer–having already conquered the customers the incumbents are neglecting–begins to conquer the high-margin customers, too.
The three companies that feature in our latest Two by Two episode largely fit the bill.
Meesho, in its current form, is an e-commerce player that’s deeply entrenched in tier-2, tier-3, and smaller markets—segments that incumbents like Flipkart and Amazon have never quite managed to penetrate. Zepto entered the already existing “quick-enough” commerce market, and carved out a whole new segment by promising deliveries within 10 minutes. Not quite disruptive innovation, but they forced all other players to make the shift or catch up. And Rapido introduced bike taxis to the already crowded Indian ride-hailing market, but their biggest innovation may well be positioning themselves almost like a SaaS platform. As a driver on Rapido, you pay a fee for using the service, not a commission for every ride you complete through it.
All three entered sectors that looked like comfortable duopolies and cracked them open.
Could this have been predicted? Are there other startups that can drive disruptive innovation?
That’s what hosts Rohin Dharmakumar and Praveen Gopal Krishnan discussed in Two by Two’s latest episode with Professor Rajendra Srivastava, former dean at the Indian School of Business and presently the executive director at the ISB Centre for Business Innovation, in the latest episode of Two by Two.
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Repeating the playbook
One interesting facet about all three—Meesho, Rapido, and Zepto—is that they saw success with their initial innovation, which they then decided to replicate in other segments.
Praveen: Zepto disrupted Instamart and Blinkit by offering this service saying, “Oh, we’ll do it in 10 minutes.” Then they went ahead and said, “We’re going to create a thing called Zepto Cafe, which will disrupt another duopoly called Zomato and Swiggy with the same principle.”
[…]
Rapido disrupted Uber and Ola by charging zero commissions. And now they’re doing the same thing by going after Zomato and Swiggy, another duopoly.
Rohin: Meesho also disrupted Flipkart and Amazon by doing zero commission. And now they’re offering Valmo, which is again a very similar, low-asset, asset-light approach.
[…]
They have semi-succeeded in attacking one, and they’re going after other duopolies using the same principle.
Rohin: The challenger DNA.
Big name, tough game
Something that Professor Rajendra emphasised throughout the podcast was that incumbents get disrupted because, in some ways, their hands are tied. They can’t push into other spaces because it might influence their valuations; if you’re a listed entity, it may cause your stock price to swing.
The bigger you are, the harder it is to change your ways.
Prof. Rajendra: The incumbents had to raise money from venture capitalists and so forth. In India, especially, there’s a lot of pressure to produce cash flows, to produce EBITDA saying, “Itna paisa lagaya hain” (We’ve put up so much money). What is the outcome of all of this?
We don’t realise that the value sometimes is in the future, not in the profits you produced yesterday.
[…]
If you’re a VC, you’ve got a five-year or seven-year window by which time you’ve got to close the fund. Therefore, you need to show some cash flow and profits. And then there’s the pressure on the companies that you’ve invested in.
It’s not that these companies don’t know that there’s a tier-2 market and a tier-3 market. Of course, they know. But the pressure is on them to produce money now, instead of expanding into tier-2 or tier-3.
That then provides an opportunity for someone else to come in.
It’s an episode full of analogies and an almost classroom-like excitement. Tune into it, you’ll understand what I mean.
And what do you think? Are there other duopolies in India that could be disrupted by a startup with a challenger DNA? Do write to [email protected] or leave a comment on our website and tell us.
Regards,
Hari Krishna
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Hari works as a producer and researcher on Two by Two and First Principles. He’s from a “little village in Kerala where nothing much happens”, enjoys reading books (although he loves buying them even more), and appreciates films—be it on Netflix or Criterion.
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