Marc Andreessen (who is both richer and smarter than I’ll ever be) recently caused a stir with his Wall Street Journal op ed, “Why Software Is Eating The World.”
Marc is a good writer, and it’s a good editorial that helps explain the increasing importance of software. But I can’t help but feel that he’s buried the most important point:
Software is eating the world because software is how we manage information. The real story is that bits are far more important than atoms in the modern world, and that gulf is only going to accelerate.
For most of human history, things have mattered more than ideas. We’re impressed by massive monuments like the pyramids of Egypt, or the Taj Mahal. And this bias made sense, because information started out way behind in the race for importance. After all, you can’t eat, wear, or live inside information. And as long as food, clothing, and shelter were uncertain resources for most humans, we didn’t have the luxury of worrying about information.
The Industrial Revolution did little to change this; we shifted from monuments to factories and skyscrapers, but the attention remained squarely on the physical world.
It’s only been with the rise of the Computer Age and the advent of Moore’s Law that information began to catch up with a vengeance. Take a gander at the companies Marc invested in: Facebook, Groupon, Skype, Twitter, Zynga, Foursquare, and LinkedIn. What do they all have in common? Not one of them makes or ships anything made out of atoms. All of their massive market value (well in excess of $100 billion) comes from pushing bits around.
In 1971, Intel’s 4004 chip had 2,300 transistors. 40 years later, a 10-core Xeon microprocessor has 2.6 BILLION transistors. That’s over a million-fold increase in that time period.
In 1971, a Chevy pickup cost about $2,300 and had a 155 horsepower engine. In 2011, a Chevy Silverado base model cost about $23,000 and had a 315 horsepower V8. True, there are a lot of invisible improvements (fuel efficiency, anti-lock brakes, etc.,) but that’s nowhere close to a million-fold increase in price/performance.
Bits probably overtook atoms somewhere in the past decade as we transitioned from the Computer Age to the Internet Age. But now that the crossover has happened, each succeeding year widens the gap, thanks to the inexorable advance of Moore’s Law.
In other words, if you think software is eating the world now, you ain’t seen nothing yet.
Great post Chris!!! Hope things are well!
Mark may be richer and smarter, but you have MUCH better hair.
Sorry, Marc, for misspelling your name…
Chris,
While you are both richer and smarter than i'll ever be (which means Andreessen is way smarter and richer). I am not sure I agree with you assertion that "For most of human history, things have mattered more than ideas."
Ideas have always mattered more than things. Ideas are what leads us to have things.
I agree with what James Burke said in the first episode of connections and that the most important invention in human history is the plow. http://en.wikipedia.org/wiki/Connections_(TV_series)
The only reason we created the plow is because we had knowledge (ideas) that the Nile overflowed each year and we could use this excess water for irrigation. This then spurred food surplus which causes the need to create pottery to store the food, ect..
But even back then, human knowledge, imagination and innovation have always spurred things and not the other way around.
Paul,
Thanks for the kind words. I do like my hair, even if it is growing ever more "distinguished" as I age. Not all of us look as good with a silver mane as you do, Paul!
homer5,
I definitely agree that ideas are critical. After all, without innovation, we wouldn't have the material wealth we have today. I think what I meant to say is that things have been the measure of value, rather than intangibles. In the 19th century, wealth came in the form of railroad barons. In the 20th century, wealth came in the form of industrialists. Today, wealth belongs to the software entrepreneurs.
Man uses information in its quest for material things. I think information became very important at the height of the cold war.
Software seems to be the driving force in today's market and should be given more importance. Good software goes a long way but if software is too good, how will software companies make money? It would take some time before it's upgraded or a better version is built.