“Software is eating the world”
Marc Andreesen says “software is eating the world.” Modern companies are information companies, not physical companies and this means they are much more scalable. Tesla, for example, is not a car. It’s a computer with wheels.
Here are just a few examples we can learn from:
Value with No Assets
AirBnB’s valuation now exceeds Hyatt; it’s the biggest, most valuable hospitality company in the world, but it doesn’t own any hotel rooms
30 Day Product to Shelf
P&G takes 300 days from product idea to Walmart shelf; Quirky, a platform-based CPG company averages 30 days
Global Revolutionary Platform
TED created a global media brand in less than 5 years by giving away all of the TED video content and allowing anyone to start a TEDx event
The average age of an S&P 500 company used to be 67 years, but it’s now less than 15 years.
The rate of value creation has accelerated incredibly and this, according to Platform Scale, is being driven by three powerful trends:
increasing connectedness, decentralized production and the rise of artificial intelligence.
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Connecting more than ever before
Increasing connectedness: armed with a smartphone and always-on connectivity, we are just a tap away from information and services we need at home and at work. Producers and consumers can be matched and connected with less friction than ever before. Platform-based business models like Uber, Wikipedia or Paypal have shown us how value can be created beyond the walls of large hierarchical corporations. The drivers, editors, vendors and customers in these three examples self-organize in a decentralized way to produce and consume value.
Harness the information you need
And when computers can parse and analyze millions of data points and return an intelligent response, new kinds of value are being discovered in long standing industries. John Deere, for example, now installs sensors in tractors to analyze the soil. Nest thermostats aggregate data from millions of homes to make energy distribution more efficient. Airbnb harnesses social feedback from guests to curate the best rooms on its network.