Episode 179 - The Water We Swim In - Exponent Recap

Podcast: Exponent

Published: 2020-01-18

Duration: 56 min

Summary

The episode explores the hypothesis that the current dominant tech companies may remain so for an extended period, drawing parallels to the historical development of the automobile industry. It suggests that we're at the end of the beginning for digital technology, with further innovation building on existing platforms rather than completely new disruptions.

What Happened

The hosts start by discussing personal updates, including travel experiences and the Australian fires, setting a personal tone before diving into the main topic. They explore the idea that technological revolutions follow a predictable pattern, similar to historical industries like the automobile, where initial bursts of innovation give way to consolidation around a few dominant companies.

Ben Thompson uses the automobile industry as a case study, highlighting how an initial explosion of car manufacturers narrowed down to a few dominant players like Ford, General Motors, and Chrysler. He suggests a similar pattern is observable in the tech industry, where companies like Apple, Microsoft, Google, and Amazon dominate.

The discussion moves to how technological paradigms have evolved from mainframes to PCs to mobile devices, arguing that these are not distinct revolutions but rather different stages of a continuous computing evolution. This leads to questioning what the next paradigm might be and whether it will be as significant as the mobile era.

James Allworth and Ben Thompson consider the potential for technologies like IoT and AR/VR to become the next big wave but suggest they may not surpass the smartphone in importance. They argue that the smartphone represents the peak of personal computing in terms of availability and convenience.

The episode delves into Carlota Perez's theory on technological revolutions and financial capital, discussing how periods of exuberance and crashes are part of the natural cycle of technological evolution. They tie this to the current state of venture capital and its search for the next big thing beyond the current tech giants.

Thompson and Allworth debate whether the current dominant tech companies will remain so, considering factors like path dependence and regional differences, such as the contrast between the U.S. and Chinese tech landscapes. They explore how these factors influence the foundational technologies and their adoption in different markets.

The episode concludes with a reflection on whether current assumptions about ongoing disruption in tech are valid or if we are in a period of stability, where future innovations will build on existing platforms rather than replace them.

Key Insights

• Technological revolutions often follow a pattern of initial innovation followed by consolidation, as seen in the automobile industry where over 1,500 car manufacturers in the early 20th century narrowed to a few dominant companies like Ford, General Motors, and Chrysler.
• The evolution of computing from mainframes to PCs to mobile devices is viewed as a continuous progression rather than distinct revolutions, raising questions about the significance of future paradigms compared to the mobile era.
• Carlota Perez's theory suggests that technological revolutions involve cycles of exuberance and crashes, which is relevant to the current venture capital landscape as investors seek the next major innovation beyond existing tech giants.
• The dominance of current tech companies like Apple, Microsoft, Google, and Amazon may be influenced by factors such as path dependence and regional differences, with the U.S. and Chinese tech landscapes offering contrasting examples.