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by thedevil
2756 days ago
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The part that I found most interesting was the idea that we're moving away from low-capital startups. Does that mean venture capital is going to have to get much bigger to fund these ventures? Does it suggest the ballooning of worldwide VC funding isn't just a bubble? (There's a really interesting chart in WSJ that I can't find right now). And will a few massive VCs become more powerful while smaller ones fizzle? What about ycombinator? Does it mean that technical talent will be more or less valuable? Much more talent will be needed, but there's probably less opportunity to build a massive business with a few talented geeks as the low-hanging software fruit is probably plucked. Talented developers might be less critical to business success. |
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(1) It isn't clear whether Evans believes the shift in higher capital requirements will occur in the early-stage or when a successful startup reaches maturity. The industries left to 'disrupt' do seem to be capital intensive industries, but that fact alone doesn't preclude 'disruption' from early-stage, low-capital startups. Technology changes the boundaries of industries through a process the economist Brian Arthur calls, "abstraction and redomaining". In Evans' terminology, new enabling layers allow us to do new things in new ways. I like to think of this as: technological change opens up competitive attack vectors that are neither inside, parallel to, or perpendicular with, but rather diagonal to an industry.
[Abstraction for Arthur is different than Evans' use of that term when Evans describes how ML will provide deeper levels of meaning in comparison to the query abstraction of Google, FB, and Amazon]
(2) He contrasts Yelp with Door Dash to illustrate this shift. I know for a fact that GrubHub was a low-capital endeavor in the early-stage. Is it now capital intensive? Perhaps.
(3) The original search engines, which Google subsequently eviscerated, were on track to be capital intensive at scale/maturity. This is a direct counterexample to a simplistic take on Evans' narrative, unless we only care about the startups that come to dominate a space.
(4) Google may actually have been a capital intensive project as it was two guys in a garage... who were finishing CS Ph.ds from Stanford. It matters how we define 'capital'. The natural move is to classify Brin and Page as an "R&D" line item on the income statement, and say that moving forward "R&D" will be more expensive and/or other indirect costs will be significantly higher. However, this doesn't sufficiently clear things up.
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I think the most we can say is that the Financial Services, Automotive, Industrial, Biotech, etc. sectors are more capital intensive than Media and much of Retail. Though, it isn't clear whether this means 'disruption' is any more expensive or complex than it was before.