I noticed some similarities among some of the most successful tech companies that changed our lives in the past ~10 years but wasn’t sure what that was. Apart from the obvious fact that those companies are ‘tech’ companies offering their product via software, the common features or a framework to define the success and increasing adoption by the consumers seemed absent. After some research and daydreaming about those companies, I found two keywords that seem to connect the dots; democratisation and decentralisation. This essay is my attempt to define those keywords and hopefully create a framework that may be useful in identifying the next big movement. This is not an attempt to forecast a future and the framework that I propose should remain flexible for which I believe is far superior to a rigid intelligence.
Democracy is widely accepted and practised in most parts of our society but technology is enabling it to be penetrated deeper into our lives and it is the very source of the power and momentum that is driving the technological transition. To be more specific, technology is achieving a deeper penetration by reducing an entry barrier of the economy, allowing more people to participate as a benefactor rather than a mere beneficiary.
Take the Software-as-a-Service (SaaS) industry as an example. Many of the successful companies in the industry grew by helping others build their business easier, faster and cheaper. Specifically, they took away headaches and roadblocks of entrepreneurs and turned it into a profitable business: an easier way to design (Canva), builds a website (Wix, Webflow), sell online (Shopify), manage customers (Hubspot), gather feedback (SurveyMonkey), manage a call centre (Twilio), manage HR (Workday)…etc. These companies essentially granted an opportunity to become a benefactor of an economic system to a larger audience. No wonder, as shown in the graph below, these companies reaped a huge economic benefit while essentially creating a whole new industry.
Such flood gate opened by technology offers two main benefits to our economy 1) it enables us to capture a larger pie through diversification and discrimination (I wrote a short piece about this here. In essence, this is rooted to the price discrimination concept we learned in ECON101) and 2) a continuous and more accurate iteration of services and products that lead to a higher quality of life for consumers. The second benefit is enabled because technology is ubiquitous, giving technology companies a tool to gather more data, both in volume and quality, while its computation power is ever increasing which enable humans to make a more informed decision. For instance, one of the reasons that the taxi industry hadn’t evolved for decades was that the most important data of customer behaviour was dispersed and kept among drivers. The taxi companies, at best, was keeping a track of how many mileage each driver drove per day and could probably notice a spike during a rainy day or a holiday season but anyone could have guessed that without tabulation. In the epoch of Uber and Lyft, every single customer behaviour is captured through the tiny device in our pocket and we are enjoying better mobility service (such as ample supply of cars during a raining day’s traffic hour).
Decentralisation is an enabler of the democratisation because it redistributes the power that was concentrated in central institutes to its willing participants and often without a bias. Anyone can choose to participate by using particular software and cast its vote (pay for a subscription or not) while providing feedback seamlessly through usage, without having to fill in an awful questionnaire. In essence, we as a user, not some central authority, holds the key and power to nurture and shape what the next big service and product will be. The liberal market economy and democratic system that we live are providing us with this freedom of voice to a certain degree (and this has been a marked improvement since the era or monarch and superior to the moribund communism) but the technological transition is accelerating this movement at a speed that was not imaginable 20 years ago. In this sense, the significance of today’s progress/transition can be compared to the time between 17th to 20th century where the world (more or less) defeated illiteracy which in turn gave more people a tool to express and exercise their rights of freedom.
The only difference today is that the current transition won’t happen over centuries but over decades and there is no limit (i.e. literacy can’t be over 100%). Essentially, we are living the free world 2.0.
As such, I believe the next big company will come under this framework for democratisation and decentralisation. I don’t think the framework is industry-specific, just as how literacy had no limits among different industries and can be applied to any. If you are in a specific industry and experiencing symptoms such as slowness in reflecting feedback, blinded in customer behaviour, ridiculous wait time on approval from central authority, lack of coordinated data…etc these are all potential pockets of opportunities where technology could penetrate through and bring about the next wave of changes to our lives.
Note: Some technological breakthroughs are larger than others because they are not industry-specific. For instance, Cloud data, AI, and Blockchain are some examples that could potentially bring in a large change to all industries and hence all the focus on recent IPOs of Snowflakes and Palantir.
- Adding two tangent concepts of Aggregate Theory by Stratchery and Data Content Loop by Kowkchain. Highly recommend reading the two in understanding how the concept of democratisation and decentralisation is reshaping consumer markets.
- Adding another source on how the internet is being handed over to the community by cdixon. Who will control the software that powers the Internet?