Disruptive Innovation vs Sustaining Innovation

Throughout our write ups on our website, playbooks, newsletters and sectoral reports, we repeatedly mention 2 phrases: Disruptive innovation and Sustaining innovation. These are 2 broad categories of Startups based on the kind of business idea you’re pursuing.

Why this matters?

Your bucket affects how much you raise, from whom, what milestones matter, and how long it takes. Get this right early. Everything that follows becomes easier.

Quick Definitions

1. Disruptive Innovation: This includes business ideas where:

   • Innovation is dramatic, game changing

   • Problem not well understood

   • Category creator/New market

   • Potential large TAM

   • No/Low competition

   • Potentially backed by patents

   • E.g. Ola Cabs founded in 2010, 1^st indigenous cab aggregator app in India - valued at $1B at ₹100Cr revenue. Udaan in B2B trade, Niramai (novel breast-cancer screening), Ather (EV ecosystem).

2. Sustaining Innovation: This includes business ideas where:

   • Innovation improves performance, reduces cost, incremental changes

   • Problem is well understood

   • Existing market

   • Proven large TAM

   • Medium/High competition

   • E.g. Rapido, Ola’s competitor, founded in 2015, valued at $133M at ₹100Cr revenue). Zepto (faster, denser logistics), Whatfix (smoother adoption of existing software), Khatabook (UX over legacy workflows).

Side by side snapshot

Parameter	Disruptive	Sustaining
Customer problem	Not well understood; needs shaping	Well understood; benchmarks exist
Market	New or re-segmented; TAM evolves	Existing; TAM proven
Competition	Low initially; rises as category proves	Medium–high from Day 1
Moat	IP, network effects, data, category narrative	Cost, speed, distribution, brand, switching cost
Go-to-market	Education + evangelism; longer cycles	Conversion + efficiency; shorter cycles
Key early metric	Engagement & evidence of behavior change	Unit economics & repeatability
Time to PMF	Longer, non-linear	Shorter, more predictable
Story	“New world” vision + credible path	“Better, cheaper, faster” with proof

How to self-diagnose?

1. Are you asking users to change behavior?

   Big change → Disruptive

   Incremental → Sustaining

   
   

2. Do reference benchmarks exist?

   Few or none → Disruptive

   Many → Sustaining

   
   

3. What wins deals—vision or efficiency?

   Vision + narrative + new outcomes → Disruptive

   Price, speed, reliability → Sustaining

   
   

4. What’s your earliest proof?

   Deep engagement, new usage patterns → Disruptive

   Margins, payback, retention cohorts → Sustaining

   
   

5. What scares you more—no category or price wars?

   No category → Disruptive risk

   Price wars → Sustaining risk