{"id":561,"date":"2013-02-16T17:20:51","date_gmt":"2013-02-16T21:20:51","guid":{"rendered":"http:\/\/blog.payne.org\/?p=561"},"modified":"2020-09-16T10:50:44","modified_gmt":"2020-09-16T10:50:44","slug":"this-is-not-your-fathers-software-industry","status":"publish","type":"post","link":"https:\/\/payne.org\/blog\/this-is-not-your-fathers-software-industry\/","title":{"rendered":"This is Not Your Father’s Software Industry"},"content":{"rendered":"

The software industry has seen major changes in the past 10 years, as the business of software has gotten increasingly efficient and friction-free. \u00a0Expensive software stacks, primitive tools, million dollar server farms, and 50+ person development teams have given way to free, open source, high-quality tools, small teams, and rentable infrastructure. \u00a0There are more skilled people creating software than ever before, and the market provides ways for the best talent to find opportunity well above an annual salary. \u00a0And just when you think it couldn’t get any easier to create software, it does. One can check this out<\/span><\/a> for the detailed information about the software.<\/p>\n

As friction goes away, things become much more\u00a0fine-grained<\/em>. \u00a0You don’t need $5m anymore to start a company: \u00a0a laptop and a cafe wifi connection will do. \u00a0This enables an explosion of new projects, but with smaller teams and narrower ideas. \u00a0The industry gorilla platforms fuel a “feature ecosystem”: \u00a0are those icons on your phone “apps” or “features”? \u00a0Viewed in person terms: \u00a0a thousand 100-person software teams might now be 30,000 3-person teams. \u00a0Software is no longer a sport of kings.<\/p>\n

This effect, in turn, is\u00a0flattening\u00a0<\/em>the industry. \u00a0Most projects now start on nearly identical footing, often with many competitors or near-competitors. \u00a0It’s like starting a civilization in a desert\u00a0vs\u00a0<\/em>the mountains; there are far fewer strategic passes and valleys to control and extract\u00a0disproportionate\u00a0value from surrounding areas. \u00a0It’s a maddening conundrum\u00a0for entrepreneurs and investors: \u00a0we’re all toting personal super computers, the world is bathed in wireless access, and there are millions & millions of mobile apps and Web sites. \u00a0But why does it feel harder than ever to create a $1b software company? \u00a0This is why.<\/p>\n

\n

Does this mean software’s dead? \u00a0Not at all, not even close. \u00a0When Marc Andreessen said “software is eating the world<\/a>“, he got it exactly right. \u00a0Software & computation are fueling a level of innovation, disruption, and advancement never seen before. \u00a0But the way software companies extract value is evolving. \u00a0In the beginning, software was sold as a product; \u00a0then, rented as a service. \u00a0Now, many companies use software to enable other services and business models.<\/p>\n

However, for the reasons outlined above, companies who are “just software” will have a much harder time achieving scale. \u00a0The real opportunities are in the next phase: \u00a0embedded software<\/em>. \u00a0This might be software\u00a0literally embedded in hardware<\/a>, or cases where software value is embedded in (and enabling) some other business. \u00a0For example, Amazon is on their way to being the world’s largest retailer, and is the largest software company that doesn’t sell any software. \u00a0Uber is building the world’s largest virtual taxi fleet, and Airbnb has built the world’s largest vacation rental network.<\/p>\n

My bet is that the next wave of disruptive software companies will look more like these examples, and less like Oracle, Microsoft, Facebook, or Salesforce.com.<\/p>\n

This is not your father’s software business any more.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The software industry has seen major changes in the past 10 years, as the business of software has gotten increasingly efficient and friction-free. \u00a0Expensive software stacks, primitive tools, million dollar server farms, and 50+ person development teams have given way … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-561","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/561","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/comments?post=561"}],"version-history":[{"count":1,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/561\/revisions"}],"predecessor-version":[{"id":822,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/561\/revisions\/822"}],"wp:attachment":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/media?parent=561"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/categories?post=561"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/tags?post=561"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}