AI - Why Software Is Eating The World.


Marc Andreessen, developer of the Mosaic web browser, wealthy entrepreneur, and famous Silicon Valley venture investor, wrote an essay titled "Why Software is Eating the World" (Andreessen 2011).

The Wall Street Journal published the piece on August 20, 2011.

Andreessen outlines the transition from a hardware-based to a software-based economy in it, and the article has been hailed as foresighted throughout the years, with the title becoming an aphorism.

However, the charismatic author of the highly respected piece is responsible for the majority of its effect.

Andreessen has been dubbed one of the most important intellectuals in Silicon Valley.

The Silicon Valley is a 150-square-mile shelf south of San Francisco that is often regarded as the world's technology innovation center.

Andreessen is the personification of Silicon Valley's techno-optimism and belief in disruptive innovation, which is defined as armies of start-ups developing technology that create new markets, disrupt current industries, and eventually remove incumbents.

The background of Andreessen's piece is the economic process that economist Joseph Schumpeter dubbed "creative destruction." 

After graduating from the University of Illinois in Urbana-Champaign with a bachelor's degree in computer science in 1994, Andreessen co-created the Mosaic web browser with Eric Bina, a user-friendly browser that could run on a wide variety of computers.

Andreessen and Jim Clarke launched Mosaic Communications Corporation, an internet start-up business in Mountain View, California, in 1994 to capitalize on Mosaic's economic potential.

The firm was renamed Netscape Communications, and the web browser was renamed Netscape Navigator; it went public in 1995, and Netscape's IPO is widely seen as the unofficial start of the dot-com era (1995–2000).

AOL bought the firm for $4.2 billion later.

Andreessen cofounded Loudcloud (later renamed Opsware), a pioneering cloud computing startup that provided software as a service, as well as computing and hosting services to internet and e-commerce businesses, in 1998.

Hewlett-Packard bought Opsware for $1.6 billion in 2007.

Andreessen and Ben Horowitz, his longtime business partner at both Netscape and Loudcloud, founded a venture capital company in 2009.

Andreessen Horowitz, or a16z (the "a" in Andreessen and the "z" in Horowitz are separated by sixteen letters), has since invested in firms including Airbnb, Box, Facebook, Groupon, Instagram, Lift, Skype, and Zynga.

A16z was created to invest in forward-thinking entrepreneurs with bold ideas, disruptive technology, and the ability to change the course of history.

Andreessen has been on the boards of Facebook, Hewlett-Packard, and eBay over his career.

He is an ardent supporter of artificial intelligence, and A16z has invested in a slew of AI-driven start-ups as a result.

"Software Eating the World" has been interpreted in popular and scholarly literature in terms of digitalization: 

A postmodern economy will be chewed up by the rise of the internet and the spread of smartphones, tablet computers, and other disruptive electronic devices in industry after industry, from media to financial services to health care.

In an essay headlined "Software is Not Eating the World," VentureBeat contributor Dylan Tweney gave an alternate viewpoint in October 2011, emphasizing the continued relevance of the hardware that underpins computer systems.

He said, "You'll pay Apple, RIM, or Nokia for your phone." 

"You'll continue to pay Intel for the chips, and Intel will continue to pay Applied Materials for the multimillion-dollar machines that produce those chips" (Tweney 2011).

To be clear, the persistence of conventional activities, such as tangible items and storefronts, and the rise of software-driven decision-making are not mutually exclusive.

In fact, technology may be the lifeblood of conventional business.

Andreessen noted out in his post that, in the not-too-distant future, a company's stock worth would be determined by the quality of its software rather than how many things it sells.

"Software is also consuming a large portion of the value chain of sectors that are commonly thought to reside largely in the physical world." 

"Software operates today's automobiles, regulates safety features, entertains passengers, leads drivers to their destinations, and links each car to mobile, satellite, and GPS networks," he said.

"The move toward hybrid and electric automobiles will further speed the software shift—electric cars are entirely controlled by computers." 

And Google and the main auto makers are already working on software-powered driverless vehicles" (Tweney 2011).

In other words, the visual appeal of great goods, the magnetic attraction of great brands, and the benefits of expanded portfolio assets will not be replaced by a software-based economy because companies will continue to produce great products, brands, and businesses as they did in the past.

Software, on the other hand, will eventually supplant goods, brands, and financial strategies as the primary source of value generation for businesses.

~ Jai Krishna Ponnappan

Find Jai on Twitter | LinkedIn | Instagram

You may also want to read more about Artificial Intelligence here.

See also: 

Workplace Automation.

References & Further Reading:

Andreessen, Marc. 2011. “Why Software Is Eating the World.” The Wall Street Journal, August 20, 2011.

Christensen, Clayton M. 2016. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Third edition. Boston, MA: Harvard Business School Press.

Tweney, Dylan. 2011. “Dylan’s Desk: Software Is Not Eating the World.” VentureBeat, October 5, 2011.

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