Two weeks ago, I traveled to Split, Croatia to speak at the Shift Conference, a large gathering of entrepreneurs and hackers from eastern and southern Europe. I had a great time meeting folks from that part of the world, and it was awesome to spend two days at the beautiful Croatian National Theatre in Split.
For my talk, I wanted to get a little macro and look at where we are in the cycle of the installation and deployment of the “information and telecommunications era”, and how that connects with how we are looking at the investment landscape at USV.
Here’s the video of the talk. My main point that history may not repeat itself but it does rhyme, or put another way: same old song, this time in a different key. If you watch the first two minutes of the video you’ll get an illustrated take on that starting with J-Lo in 2002 and getting all the way back to Herbie Mann in 1974:
I’ll give a quick annotated review of the talk here:
USV’s original investment thesis was heavily influenced by economist Carlota Perez whose research detailed the life cycle of new technologies as they enter and penetrate society. Perez found that fundamental new technologies — the kinds that radically re-shape the economy and society — tend to follow a common pattern, which she breaks into two phases: installation and deployment. The installation phase is characterized by wild exuberance and exponential growth, as a new technology breaks onto the scene and the early leaders take hold. The deployment phase, which typically occurs after some sort of blow-up (in the market or in law/regulation/society), sees the technology penetrate all corners of society, slowly but surely re-shaping norms, laws, customs, regulations, etc.
Looking at the last ~40 years of computing and the internet (26 years now since the birth of the WWW), we can see this cycle play out, perhaps with the dot-com bomb of 2000 marking the inflection point:
Looking at the shapes of the curves during these two respective phases, you’ll notice that the farther we get into the deployment phase, the more the rate of growth flattens out, as the technology is better understood and therefore de-risked.
Perhaps the specific dates shown here are right, or perhaps not — you could argue that the “deployment phase” really didn’t take hold until mobile was firmly in place (2008 ish), but the point is really just that: at this point, the overall operating model of web+mobile is understood, and the world is well along in adopting it and applying it to all things.
Another way of saying that is that now, in the deployment phase of the web+mobile era, the incumbent industries from the previous era (the industrial era) are all facing intense competition and are under threat of being re-shaped in the web+mobile model:
At the same time, however, we’re seeing the other end of the cycle begin to play out: we now have “new incumbents” representing the web+ mobile model. This is Google, Amazon, Twitter, Facebook (from the first big wave of desktop applications), and now Uber, Airbnb, Instagram etc (from the second wave of mobile applications).
Now that these new incumbents have staked out their territory, we’re in the middle of the traditional cycle of technology power wars as big platforms duke it out, and new insurgents try to poke holes in their grip:
I’m not prepared to say that today’s “new insurgents” (essentially blockchain companies and others that are challenging incumbents on data control practices) necessarily represent the next great surge, but there is undoubtedly a serious amount of activity that’s focused on disrupting the “traditional” web+mobile model, as opposed to further deploying it farther into society/industry.
So to summarize, the two big forces we’re focused on at the moment are the deployment of the web+mobile model, reshaping the communications architecture of every industry, and the disruption of the web and mobile model, challenging the new incumbents based on their data architecture: