Why do established companies like Kodak or Blockbuster fail despite strong management? Clayton Christensen's "The Innovator's Dilemma" explains: Incumbents prioritize sustaining innovations for high-margin customers, overlooking disruptive technologies that begin in niche markets but eventually dominate. Thread: How @Coinbase is addressing this challenge through Base, led by @brian_armstrong and @jessepollak .

In the book, disruptions start as inferior but accessible alternatives, evolving to upend markets. In crypto, DeFi and L2 solutions threaten centralized exchanges like Coinbase.

Rather than ignore this, CEO Brian Armstrong directed Jesse Pollak to explore onchain opportunities, with the ultimate goal of onboarding 1B users to crypto. Jesse, considering departure in ~2021 due to Coinbase's centralized focus, was given a small, protected team to innovate.

The outcome is @base: An $ETH L2 network enabling low-cost transactions (under one cent, sub-second speeds), DeFi, social applications, and the recently launched @baseapp in July 2025—an integrated platform for wallets, messaging, and payments. This approach allows Coinbase to self-disrupt and secure its position in the decentralized economy.

Long-term advantages include diversified revenue from sequencer fees, enhanced user retention through ecosystem integration, and a strategic moat. Business scholars may one day analyze Armstrong's strategy as a prime example of overcoming the Innovator's Dilemma. Bullish $COIN