Reshaping Industries
I was reading back on Chris Dixon’s post about Andreessen-Horowitz’s $50 Million investment in Buzzfeed, and thought it was very insightful.
Honestly, I wasn’t a big fan of the “listicle” machine and openly bashed on it before, grouping it with the likes of ThoughtCatalog, Upworthy, and Elite Daily, convinced that most of the material in these new-age media sites were created solely for clickbaits. But after some time, I realized my opinion was a heavy generalization that I can attribute to my liberal studies elitism.
However, as I’ve dug more about Buzzfeed as a company, and found out that it’s started and ran by a beast in digital media (Jonah Peretti, previously co-founded The Huffington Post), and that the inner-workings of its data science and engineering teams is top-notch in the tech industry, I was blown away. In Chris Dixon’s post, he shares that Buzzfeed has 150M viewers, exceeding triple-digit revenues, and is the prime definition of a full-stack startup.
But perhaps the most striking to me was this comment:
The most interesting tech companies aren’t trying to sell software to other companies. They are trying to reshape industries from top to bottom.
Tesla, SpaceX, Netflix, Spotify, Uber, Airbnb—that list is ever growing and will only continue to grow in the next decade. But how exactly is an industry reshaped?
He points out a linear theory about technological revolutions that suggests they start with financial bubbles that rapidly “install” new technologies, followed by a crash, then recovery, and a long period of productive growth as new technology is “deployed” to new industries, reshaping them in the process.
The primary question then, to consider:
What industries are the best candidates for the next phase of deployment? The likely candidates are the information-intensive mega-industries that have been only superficially affected by the internet thus far: education, healthcare, and finance. Note that deployment doesn’t just mean creating, say, a healthcare or education app. It means refactoring an industry into its “optimal structure”—what the industry would look like if rebuilt from scratch using the new technology.
Sure, education, healthcare, and finance are among the most regulated industries in the US, and are all in dire need of a global disruption especially as we enter an era that’s highly mobilized, socialized, and globalized completely unprecedented in history. However, these aren’t exactly “secrets” in Peter Thiel terms: we all know they need to be changed for the better. The real nugget in these realizations is not so much acknowledging these industries need to be drastically improved, but rather, identifying the idea “Most people believe X, but it’s really Y.”
Many amazing up and coming companies have already started in these realms (cryptocurrency, adaptive learning, localized genetic sequencing, etc.), but my gut tends to look for other industries that are facing many problems, but also have gigantic markets, and desperately need technical revolutions to reshape its processes.