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Why SW is eating the world - SNU

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Why SW is eating the world
Marc Andreessen, 2011VC that invested inFacebook,Groupon,Zinga, Twitter, Skype, Foursquare, LinkedIn
His View
Internet, SW companies are building real, high growth, high margin, highly defensible businessesWe are in the middle of a dramatic and broad technological and economic shift in which SW companies are poised to take overlargeswathesof the economy
Trends in biz practices
Major businesses and industries are being run on SW and delivered as online servicesMany of winners are Silicon Valley-style entrepreneurial technology companies that invade or overturn legacy industry structures
Why is this happening now?
Computer and Internet technologies have advanced across some thresholdOver 2B people use the broadband InternetOn back-end, SW tools and Internet-based services make it easy to launch a new global SW-powered startups with low start-up cost
Example 1: Book
Fall of BordersDecline of Barnes and NobleRise of AmazonThe world’s largest bookseller2001, Borders handed over its online biz to AmazonAmazon virtually sells everything onlineEven books themselves are SW
Example 2: Video
Fall of BlockbusterRise of Netflix, HuluAnd more: Amazon Video and iTunesOther media companies are increasingly more online-service oriented
Example 3: Music
iTunes,Spotify, Pandora2% in 2004 to 29% in 2010Traditional record companies play a diminishing role as a content providerThey provide content to the above companies
Example 4: Videogame
Fastest growing company isZyngaRovio, maker of Angry BirdsTraditional game companies like EA and Nintendo have been stagnating
Example 5: Movie production
Pixar, one of the best movie production companies, is a SW company.Disney has to buy Pixar
Example 6: photo
Photos in cameras and phones are uploaded to the Internet for archiving and sharingShutterfly,Snapfish,Flickr,…Kodak had been happy with film cameras, and now…
Example 7: marketing
GoogleGroupon, Living Social, FoursquareThey use SW to eat the retail marketing companies
Example 8: telecom
Skype: the fastest growing companyCenturyLink(3rdtelecom company) has declined fastAT&T and Verizon have survived by transforming into SW companies, partnering with Apple andsmartphonemakers
Example 9: recruiting
LinkedIn is the fastest growing companyEmployees edit their resumes, which are directly searched by recruiters
Example 10: autos
SW is eating much of the value chain in car industriesSW runs engine, controls safety functions, entertains passengers, guides drivers, …Hybrid, electric cars will accelerate the shiftDriverless cars?
Example 11: logistics
Wal-mart uses SW to power its logistics and distribution capabilitiesFedEx is thought of having the best SW network to which trucks, planes and hubs are attachedSuccess or failure of airplane companies hinges on SWTicket pricing, route optimization,…
Example 12: natural resources
Oil and gas companies use supercomputing for visualization and analysis in exploration effortsAgriculture is powered by SW; satellite analysis of soils for seed selection
Example 13: finance
Every financial transaction is done in SWFinancial SW companies allows anyone to accept credit card payments with a mobile phonePayPal allows payments and transfers online
Example 14: defense
National defense is increasingly SW-basedA modern combat soldier is embedded with a web of SW for communications, logistics, and weaponsSW-powered drones launch attacksData mining to detect terrorist attacks
What next?
Healthcare & EducationThey have been resistant to entrepreneurial changeBut fundamental SW-based transformation is coming
Also,…
Companies in every industry need to assume that a SW revolution is comingEven SW-based companies as wellOracle and MS are threatened by new SW offerings like Salesforce.com and AndroidThe battle between incumbent companies and SW-powered insurgents will be epic
Challenges (1/3)
Every new company is being built in the face of massive economic headwindsA successful company will be strong and resilient and will grow even faster when economy becomes stable
Challenges (2/3)
Many people lack the education and skills to join new SW-powered companiesEvery company is starved for people with talentQualified SW engineers, managers, marketers, salespeople will be invaluableWhile national unemployment will soarThe more SW penetrates the industry, the less employees will be required
Challenges (3/3)
The new companies need to prove their worthBuild strong cultures, delight customers, establish competitive advantagesJustify their rising evaluations
Conclusions
Building a SW-powered company is easyMaking it successful is difficultEvery industry will be transformed by SWThat is the big opportunity

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Why SW is eating the world - SNU