Jabes Twitter Musings - June 17th
Did Software Eat the World?
Way back in the year 2011, Marc Andreesen spoke words in a WSJ article which have gone on to live in infamy. He famously coined the phrase, “Software is eating the world.”
What did he mean? Rather than take an excerpt from the article itself, let’s look at a Quora answer instead:
A decade later and I would say...he’s not wrong. It seems obvious today, but so is everything when seen through the lens of revisionist history. In fact, let's play the game where I list a handful of billion dollar companies which didn’t exist in 2011.
Snap
Slack
Uber
Instacart
DoorDash
WeWork
Stripe
Robinhood
Coinbase
So software has been eating the world. But the world is a big place and software certainly can't swallow it all at once. It must gradually chip away until it is primarily in code.
Let’s check in on software’s appetite across a handful of major industries.
Media is close to being swallowed up, digested and ready to come out the other side. From the first blog post to a Limewire download to an iPhone video recording. The writing was on the wall for media to be the first to go since content is just 1’s and 0’s. Media was like that character in Scream who you knew was going to die first the moment the movie started.
How many people still catch highlights on SportsCenter instead of Twitter? How many people still get their news from a newspaper instead of a feed? How many people tune into ABC on Friday night to see which movie is programmed instead of firing up Netflix? My guess, not a ton. I mean, just look at the revenue for newspapers compared to a digital powerhouse.
Retail will be the next to get flipped. Malls are still struggling and COVID only accelerated the inevitable push to ecommerce. If you want to see where this is going, just take a peep at Asia...
As more shopping moves online, software becomes the focal point. It must feel good to have these tailwinds at Shopify. This "software is eating the world" idea isn’t being ignored by the giants either. Nike has been doomsday prepping for quite some time.
Old world companies like Lululemon are acquiring new world software companies like Mirror if to neutralize the threat.
Finance is fighting a two-front war with FinTech (short for Finance Technology) and DeFi (short for Decentralized Finance). Fintech is layering on super slick UIs to old financial rails and acquiring customers faster than you can say (insert witty word here).
DeFi, a legit crypto use case, is taking the world by storm as it begins to add banking for the unbanked.
When the FinTech and DeFi talent eventually team up, look out. There will be a new sheriff in town.
The last three industries on the list (Education, Housing, and Healthcare) have the least amount of dots eaten. No, I didn’t do some fancy math to decide how far along each industry was. It is mostly my own opinion. But I did refer to some graphs like this one.
Technology is extremely good at one thing and that is driving costs down. If you look at this CPI chart, we can see that there is still a long way to go in Education, Housing and Healthcare.
One reason I think these industries (including Finance to some extent but DeFi said f**k it and went permissionless) haven’t been fattened up and slaughtered by software is regulation. These are gigantic industries and the incumbents are going to fight for their lives. That means slowing down companies with heavy regulation and legal battles. Regardless, software comes for all.
Education is holding strong but you can see cracks in the armor. You have legit homeschooling options (Primer, Outschool), On-Demand Courses (Udemy, Masterclass, LinkedIn Learning), Online Degree Certifications (Coursera, Udacity), Engineering Bootcamps (Lambda School, General Assembly), Cohort based MBA-like programs (Ondeck, Reforge) and remote learning options (Zoom). Not to mention YouTube, which has the single most impressive collection of online knowledge that’s both free and easily searchable.
Housing is also under attack. I have read that the home buying and selling process is extremely painful. But since folks do it so infrequently, they don’t really care much to change it. They just live with it and all its chafe. This is obviously music to the ears of companies like Zillow, Redfin and Opendoor.
Healthcare will be the last to fall. Software will likely improve both the patient experience (think telemedicine) as well as solve difficult health threats. Look no further than Moderna and the first mRNA vaccine which helped turn the fight against COVID around. Another category within healthcare that is taking off as of late is FemTech. Entrepreneurs are using software to solve difficult problems in the understudied female health sector. This will lead to a major discoveries for millions, if not billions, of women across the globe. I believe Healthcare is the biggest industry out there and that means juicy returns for innovators (and investors) who can bring it into the world of software.
That's all I got for you this week. Until next week.
Cheers,
Jabe