I can’t remember any time when more spaces for innovation and entrepreneurship were wide open than now
Lenin supposedly said:
There are decades where nothing happens, and there are weeks where decades happen.
It’s the same in technology.
I came to Silicon Valley in the mid-90’s, just in time to see the dot-com boom unfold. Lots happened very quickly in that time. There were a few more such periods of rapid change since, like when centralized social media got going, and when phones turned into real computers. But for many years now, not much has happened: we got used to the idea that there’s a very small number of ever-larger tech giants, which largely release incremental products and that’s just that. Nothing much happens.
But over the last year or so, suddenly things are happening again. I think not only are the spaces for innovation and entrepreneurship now more open than they have been for at least a decade or more; it’s possible they have never been as open as they are now.
Everybody’s favorite subject: machine learning and AI. I don’t believe in much of what most people seem to believe about AI these days. I’m not part of the hype train. However, I do believe that machine learning is a fundamental innovation that allows us to program computers in a radically different way than we have in the past 50 and more years: instead of telling the computer what to do, we let it observe how it’s done and have it copy what it saw. Most of what today’s AI companies use machine learning for, in my view, is likely not going to stand the test of time. However, I do believe that this fundamentally different way of programming a computer is going to find absolutely astounding and beneficial applications at some point. It could be today: the space for invention, innovation and entrepreneurship is wide open.
The end of ever-larger economies of scale and network effects in tech. The dominant tech companies are very close to having pretty much all humans on the planet as customers. The number of their users is not going to double again. So the cost structure of their businesses is not going to get reduced any more simply by selling the same product to more customers, nor is the benefit of their product going to grow through growing network effects as much as in the past. It’s like they are running into a physical limit to the size of many things they can do. This opens space for innovation and successful competition.
Most interesting, it allows the creation of bespoke products again; products that are optimized for particular markets, customer groups and use cases. Ever noticed that Facebook is the same product for everybody, whether you are rich or poor, whether you have lots of time, or none, whether you are CEO or a kid, whether you like in one place or another, whether you are interested in sports or not and so forth? It’s the same for products of the other big platform vendors. That is a side effect of the focus on economies of scale. All of a sudden, increased utility for the user will need to come from serving their specific needs, not insisting that all cars need to be black. For targeted products, large platforms have no competitive advantages over small organizations; in fact, they may be at a real disadvantage. Entrepreneurs, what are you waiting for?
The regulators suddenly have found their spine and aren’t kidding around, starting with the EU.
The Apple App Store got in the way of your business? They are about to force the App Store open and allow side loading and alternate app stores (although Apple is trying hard to impede this as much as possible; a fight is brewing; my money is on the regulators).
The big platforms hold all your data hostage? Well, in many jurisdictions around the world you now have the right to get all copy of all your data. Even better, the “continuous, real-time access” provision of the EU’s Digital Markets Act is about to come into force.
The platforms don’t let you interoperate or connect? Well, in the EU, a legal requirement for interoperability of messaging apps is already on the books, and more are probably coming. Meta’s embrace of ActivityPub as part of Threads is a sign of it.
Imagine what you can do, as an entrepreneur, if you can distribute outside of app stores, use the same data on the customer that the platforms have, and you can interoperate with them? The mind boggles … many product categories that previous were impossible to compete with suddenly are in play again.
Social networking is becoming an open network through the embrace of ActivityPub by Meta’s Threads. While nobody outside of Meta completely understands why they are doing this, they undoubtedly are progressing towards interoperability with the Fediverse. Whatever the reasons, chances are that they also apply to other social media products, by Meta and others. All of a sudden competing with compelling social media application is possible again because you have a fully built-out network with its network effects from day one.
Consumers know tech has a problem. They are more willing to listen to alternatives to what they know than they have in a long time.
And finally, 3D / Spatial Computing a la Apple. (I’m not listing Meta here because clearly, they don’t have a compelling vision for it. Tens of billions spent and I still don’t know what they are trying to do.)
Apple is creating an an entirely new interaction model for how humans can interact with technology. It used to be punch cards and line printers. Then we got interactive green-screen terminals. And then graphics displays, and mice. That was in the 1980’s. Over the next 40 years, basically nothing happened (except adding voice for some very narrow applications). By using the space around us as a canvas, Apple is making it possible to interact with computing in a radically different way. Admittedly, nobody knows so far how to really take advantage of the new medium, but once somebody does, I am certain amazing things will happen.
Again, an opportunity ripe for the taking. If it works, it will have the same effects on established vendors as the arrival of the web had on established vendors: some managed to migrate, or the arrival graphical user interfaces on the vendors of software for character terminals; most failed to make the switch. So this is another ideal entrepreneurial territory.
But here’s the kicker: what if you combined all of the above? What can you build if your primary interaction model is 3D overlayed over the real world, with bespoke experiences for your specific needs, assisted by (some) intelligence that goes beyond what computers typically do today, accomplished by some form of machine learning, all fed by personal data collected by the platforms, and distributed outside of the straightjacket and business strategies of app stores?
We have not seen as much opportunity as this in a long time; maybe ever.