The most obvious crossroad is the one where Economy meets Technology. Sector by sector we are witnessing the impact of digital, the Internet and other Day After Tomorrow technologies on every single aspect of business. Technology used to be a mechanism for ‘optimizing’ an industry, but now it is fundamentally reshaping entire industries and markets.
Back in 2011, Marc Andreessen described this transition beautifully in his famous Wall Street Journal op-ed “Software is eating the world”. As the founder of the brilliant but tragic Netscape, he became the poster-child of the first Internet bubble, who then reinvented himself as one of the most influential financiers in Silicon Valley. What he wrote back then in his op-ed, still stands strong: “Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries can be widely delivered at global scale.” This transition is now happening at full speed. Amazon has transformed retail with software, Netflix has transformed television with software, and Uber has transformed transportation with software.
And we’re just getting started.
When I was in my twenties, the brilliant ‘Being Digital’ by Nicholas Negroponte was one of the most influential books around. He was the founder of the MIT Media Lab, a forward-thinking interdisciplinary research lab at the Massachusetts Institute of Technology that encourages the unconventional mixing and matching of seemingly disparate research areas: from technology, to media, science, art and design.
Negroponte’s book describes two types of companies: there are the ‘bits’ companies and the ‘atoms’ companies. ‘Bits’ companies deal with bits and bytes, data, information, ones and zeros. Banks are typically bits companies, since they essentially only deal with the information about the accounts of customers. Equally, insurance companies are ‘bits’ companies. Companies that haul cement from A to B are obviously ‘atoms’ companies as they physically move ‘real’ stuff around. Negroponte fundamentally believed that, in the end, every atom related business would come to be ruled by ‘bits’.
And it seems that he was right. Take mobility: Uber is doing a pretty good job of transforming an ‘atoms’ business of physical cars into a ‘bits’ business of mobile platforms, APIs and Big Data. Uber does not own any cars. In fact, it doesn’t own any of the ‘atoms’ that are part of its service. Yet, it has built incredible value in a very short period of time by ‘orchestrating’ the flow of bits in such a way that you can hail a ride from its mobile app. Uber was founded in March of 2009, and just 10 years later, it was floated on the New York Stock Exchange with a market capitalization of more than $70 billion.
Andreessen’s ‘software is eating the world’ thesis was spot on in predicting what is unfolding in front of our very eyes. Information has become the core fuel of global platforms, some of which then turn into dominant ‘category kings’, that seem invincible.
Today, we’re experiencing a backlash against this category king phenomenon. Platforms such as Facebook and Google are under increased scrutiny over the power they yield, the vast and deep knowledge they have amassed, and their consequent influence over consumers. As I stated earlier, we’ve gone a long way since thinking “Yeay, the Internet is going to cut out all middlemen from our transactions and the traditional media will no longer be able to control our sense of reality. We’re free!”
Not so much. Twenty years later we’re having some serious second thoughts about this evolution. Amazon grew out to be the most monstrous middleman we could have ever imagined: it knows exactly how to play us as consumers, and massively uses its economy of scale to pressure suppliers. Middlemen are back with a vengeance. Some of us even cherish nostalgic feelings of sympathy for the – in retrospect – limited influence of the ‘old’ media when we compare it to the highly manipulative power of a platform like Facebook. Not so long ago, a science fiction story where Russia influenced a Big Data company like Cambridge Analytica to leverage a global platform like Facebook to alter the outcome of the US Presidential elections would have seen absurdly far-fetched.
But reality is much stranger than fiction nowadays.