The best technologies and companies don’t commoditize existing markets. They create entirely new markets.

Take Uber. Ostensibly competitive with taxis or sedan services, the reality is that Uber competes with non-use. Or, as Uber CEO technology Travis Kalanick phrases it, “It’s not about the market that exists, it’s about the market we’re creating.”

Uber’s New Market: People Like Me

I experienced this just last week. I had to drop off my car at a local mechanic, a 15-minute drive. Normally I would have waited for my wife to get home so that we could coordinate the drop off/pick up.

Rather than inconvenience my wife, I spent $9.01 to have an Uber pick me up at the shop and drive me home. That’s not money stolen from a taxi service, as taking a taxi is a completely different thing in my mind. I associate taxis with “cars I ride in when I’m traveling,” not to mention “drivers who get angry or pushy if I opt to pay with a credit card.” So it never occurred to me to call for a taxi.

Uber is different. It’s the person who picks me up and drops me off whenever I launch an app on my iPhone. It’s so convenient that I end up using Uber all the time in situations when I wouldn’t bother to call a taxi, not to mention times when a taxi would make sense … if it weren’t less convenient.

Competing Against Car Ownership

In fact, I’m starting to wonder why I own a car at all. I’ve already used Uber to get to the airport and to business lunches. Heck, but for the fact that I’d miss all the chatter, I’d consider having Uber drive my kids to their soccer practices. (I wonder if Uber would coach practice for me when I’m out of town?)

I’m not alone in thinking that Uber—and, indeed, all truly disruptive technologies or businesses—doesn’t really compete against old-guard incumbents but rather for dollars not yet spent. I used to see this in the Enterprise Content Management market: products or companies like Microsoft SharePoint and Box didn’t compete with Documentum or Vignette: they competed for team collaboration dollars in markets that were hitherto undefined or non-existent.

Or, as VisionMobile puts it, the real competition today is against incumbents in separate industries:

In the case of Uber, Kalanick argues that in addition to taxis, Uber competes against private car ownership for some people. As he notes, Uber could make “car ownership a thing of the past.”

Skate Where The Puck Is Heading

Years ago then MySQL CEO Marten Mickos argued that MySQL’s mission was as follows:

The relational database market is a $9 billion a year market. I want to shrink it to $3 billion and take a third of the market.

But over the years, it has become clear that MySQL is far bigger than this. It’s not about commoditizing the legacy database market. It was about enabling a new generation of startups and applications that weren’t possible—whether financially or technically—under Oracle and IBM.

For startups today, the trick is to target the right markets. Going after an incumbent is convenient because it offers an easily defined market that VCs can appreciate and fund. But it’s also the hardest type of market to crack, as Redmonk analyst Stephen O’Grady points out in a fascinating Twitter exchange, wondering why more “more [startups haven’t] read their Sun Tzu and prioritize less heavily defended markets.”

Not only this, but it’s far more interesting to open up new markets. Wallets are harder to find at first, but once the formula works (Google AdWords, anyone?), it really, really works.

So think big. Don’t try to undermine the “taxis” of your market. Obliterate car ownership instead.

Image courtesy of Flickr user Lee, CC 2.0.