Unbundling Tech

A story of unbundling in the tech industry: 20 years of consumer Internet evolution.

Once upon a time there was AOL, which was a completely integrated Internet access/information/communication service. Then Yahoo came along and unbundled the information/communication parts like email/IM/sports-scores/stock-quotes from the access service. One of the things you could do on Yahoo was search, then Google came along and unbundled that.

You can search for anything on Google, including people; Facebook came along with a much better way to just search for people. Three things you can do on Facebook are messaging, photo sharing, and status updates; therefore Whatsapp, Instagram, and Twitter. And yes, Yo unbundles the creation & existence of a message from the contents of a message, unbundling Whatsapp and Twitter :-).

Ev Williams (@ev) is the modern genius of this concept–playing out in our industry continuously since the 1950’s. The part people often miss is that you can get extremely powerful second/third order effects at each step with his pattern. The entrepreneurs generally have a pretty good sense of this when they’re doing it, but it doesn’t become clear to others until later. This is a pattern what we love to fund: unbundle X from Y, but then use the liberation of X as leverage to do amazing new things with X. And the howls of press and analyst outrage at the apparent stupidity of each unbundling are very helpful for keeping valuations down :-).

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12



Come on, Silicon Valley, you can do better than this

1950’s + 1960’s + 1970’s + 1980’s + early 1990’s view of computer technology = “Nerds!”

Late 1990’s view of computer technology = “Everyone will get rich!”

2001’s view of computer technology = “The nerds screwed us!”

2003’s view of computer technology = “We knew those nerds were wrong all along!”

2009’s view of computer technology = “Those nerds are completely out of ideas!”

2013’s view of computer technology = “Those nerds and all their crazy ideas are going to destroy all the jobs!”

And now = “Those nerds are completely out of ideas again, and now they’re having sex too!”

Stay tuned for more updates from our favorite show, “As The Nerds Turn” :-).

Source – tweets: 1,2,3,4,5,6,7,8


Quirky to Reinvent American Manufacturing and Consumer Products

Equally big news of the day: our company Quirky is spinning out the “Internet of things” platform Wink as standalone company!

Quirky, with its partners including GE and Home Depot, is reinventing American manufacturing of consumer products. Now Wink will provide a standard software layer across all of Quirky’s products plus many others including GE, Honeywell, and Philips.

Quirky partner Home Depot “now sells 600 smart-home products, six times as many as it did two years ago.” The revolution is happening now. Important to note this isn’t just about toys for rich people; it’s about energy conservation, water conservation, security, and safety.

Source: Tweets – 1,2,3,4,5


How Our Virtual and Physical Worlds Improve One Another

Proposed: Unless you’re with your kids, what’s on screen in your hand is likely more interesting and important than what’s around you. Sounds extreme, yet how could it not be true most of the time? The screen in your hand contains the entire world vs immediate locality.

This is personal for me: I grew up in very small rural town; Kids in rural towns today grow up way more connected to the world than I did. People around you not interested in same things? No problem, the screen in your hand connects you to like-minded people everywhere. People around you can’t teach you the things you want to know? No problem, the screen in your hand gives you all the information you want. The place where you live doesn’t have economic opportunity for you? The screen in your hand gives you access to global opportunities, markets.

Bastiat’s “seed and unseen”: What we see are people staring at their phones. What we don’t see are their interactions with the world. And then it comes back around: Our online virtual world enhances and improves our local physical world and our friends and family in it.

Recommend reading David Gerlenter’s “Mirror Worlds“, on how our virtual and physical worlds improve one another:

Source: Tweets – 1,2,3,4,5,6,7,8,9


On AI and the Turing Test

Recently the Internet got all fired up–did a software bot pass/not pass the Turing Test:

The Turing Test, proposed by uber-genius Alan Turing in 1950, is: Can a software bot convince a human it’s also human, via text chat?

My view is that Turing Test has always been malformed, humans are too easy to trick, passing test says almost nothing about software. “But Marc, Alan Turing was the genius of all time, and you’re just some dude on Twitter. What the hell, man?” That’s a good point!

Turing said something else that I think is far more relevant, which he announced loudly in the executive cafeteria at Bell Labs in 1942: “I’m not interested in developing a powerful brain. All Iā€™m after is just a mediocre brain, something like the president of AT&T.”

And I think that’s actually what happened, and it happened in the form of enterprise software: the code that runs businesses today. Yep, that’s right: Actual AI is SAP, Peoplesoft, Oracle, Salesforce, Workday, Netsuite, Great Plains, and a thousand others.

AI turned out to be the last thing anyone expected. Banal.

Credits: Conversations with @cdixon @balajis @bhorowitz

Source: Tweets – 1,2,3,4,5,6,7,8,9,10


Dear Young Person, If You Are a Geek, the World Needs You.

A rare interview with one of my heroes: Stanford Professor Donald Knuth, author of “Art of Computer Programming“…

I can speak only to people who happen to have grown up with the strange kind of ‘brain organization’ that I seem to have. For lack of a better word, let me simply say that I’m a ‘geek.’ I haven’t got a good definition or a good litmus test for geekhood but I definitely know it when I see it; and I see it in about 2% of the world’s population. The main characteristic is an ability to understand many levels of abstraction simultaneously, and to shift effortlessly between in-the-large and in-the-small. Dear young person, if you are a geek, the world needs you, and you will never run out of opportunities to apply your talents.

Source: Tweets – 1,2,3,4,5,6


A Coke is a Coke

For the following, substitute rapidly rising tide of products and services for “Coke”:

What’s great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca-Cola, and you know that the President drinks Coke, Liz Taylor drinks Coke, and just think, you can drink Coke, too. A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it.

Andy Warhol on Coca Cola

Source: Tweets – 1,2,3,4,5,6


Cycle Time Compression: The Most Underestimated Force in Determining Winners and Losers in Tech

Cycle time compression may be the most underestimated force in determining winners and losers in tech. The first clear instance of cycle time compression: Cloud/SAAS vs on-premise enterprise software. Cloud/SAAS development cycles can be far faster than on-premise software; single instance deployed instantly to all customers. Further, customers can try and adopt cloud/SAAS far faster than they can try and adopt on-premise software.

Implication: Cloud/SAAS is probably impossible to compete with for on-premise software across multiple product cycles.

The second clear instance of cycle time compression: Product improvement and customer upgrade cycles for phones vs TVs and cars. Consumers can upgrade their phones every 1-2 years, vs TVs at 5-8 years? Cars at 10-12 years? With phones improving by leaps & bounds.

Implication: At given point in time, your TV can be 4-6 years behind your phone; your car can be 9-10 years behind your phone.

Implication: TVs and cars will become accessories for phones, not the other way around. And it’s already happening: Airplay, Chromecast.

Interesting note: Web cycle times still much faster than mobile app cycle times due to restrictive mobile app store policies.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10


Why Robots Won’t Eat All the Jobs

This is probably a good time to say that I don’t believe “robots will eat all the jobs.” The preceding tweetstream was to extrapolate the idea out all the way, not to make the case that it’s what’s going to happen.

First, robots and AI are not nearly as powerful and sophisticated as I think people are starting to fear. Really. With my VC/tech hat on I wish they were, but they’re not. There are enormous gaps between what we want them to do and what they can do. So there is still an enormous gap between what many people do in jobs today and what robots and AI can replace, and will be for decades.

Second, even when robots and AI are far more powerful, there will still be many things that people can do that robots and AI can’t. Creativity, innovation, exploration, art, science, entertainment, caring for others… we have no idea how to make machines do these.

Third, when automation is abundant and cheap, human experiences become rare and valuable. It flows from our nature as human beings. Examples: Price of recorded music goes to zero; live touring business explodes. Price of drip coffee drops; handmade gourmet coffee grows. You see this effect throughout luxury goods markets, e.g. handmade high-end clothes. This will extend out to far more consumers in future.

Fourth, just as most of us today have jobs that weren’t even invented 100 years ago, the same will be true 100 years from now. We have no idea what the fields/industries/businesses/jobs of the future will be; we just know we will create an enormous # of them. If robots/AI replace people for many of the things we do today, the new fields we create will build on a huge number of people then available. People 50, 100, 150, 200 years ago would marvel at the jobs that exist today; the same will be true 50-100-150-200 years from now. To argue huge numbers of people will be available but we will find nothing for them (us) to do is to dramatically short human creativity.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15


If Robots Eat Jobs, Then Products Get Cheaper

 photo credit: Mark Strozier - cc

photo credit: Mark Stroziercc

The necessary consequence of “robots eat all the jobs” is “everything gets really cheap.” The main reason to use robots instead of people to make something is when the robot can make it less expensively. When people can make something that costs less than what robots can make, then it makes economic sense to use people instead of robots. This is basic economic arbitrage at work.

It sounds like it must be a controversial claim but it’s simply following the economic logic. So “robots eat jobs in field X” = “products get cheaper in field X” = “consumer standard of living increase in field X” — necessarily. So arguing against “robots eat jobs” is equivalent to arguing “punish consumers with unnecessarily higher prices.”

Indeed, had robots/machines not eaten many jobs in agriculture and industry already, we would have a far lower standard of living today. Just as increases in consumer goods prices disproportionately hurt the poor, holding back on robots eating jobs would more hurt the poor.

The same logic applies to trade barriers (import tariffs): disproportionately hurt poor consumers by inflicting higher consumer goods prices. Here’s the arbitrage logic: Suppose humans make widget X profitably at $10 price to consumer. Robots can make X at $5 price to consumer. Economics drive X to be made entirely by robots; consumers win.

But then imagine the owner of the robots cranks X price to consumer to $20. Suddenly it’s profitable for humans to make X again; entrepreneurs immediately start companies to make X with humans for price $10 again. Therefore, with rare exceptions, there won’t be states where “robots eat jobs” and “products get more expensive.” They will almost always be cheaper.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12,13