Software is still eating the world

Russ Roberts has a new EconTalk podcast interview with Marc Andreessen that is worth a listen:

Marc Andreessen, venture capitalist and co-creator of the early web browser Mosaic, talks with EconTalk host Russ Roberts about how success in venture capital is more about winners that you missed and not losers that you backed. Other topics discussed include the rise of the developing world and the smartphone revolution, why Bitcoin is paving the way for innovative uses of the internet, an optimistic view of the future of journalism, changes in the healthcare system, and the future of education around the world.

One thing I remember clearly is Marc’s 2011 Wall Street Journal opinion piece, “Why software is eating the world.”  His thesis, which is even more true today, was that software had reached such a level of power and sophistication, and smart devices were so ubiquitous and networked that software would be able to augment or completely replace many existing bricks and mortar, people-intensive businesses.  Online banking and the disruption of the news media was just the beginning, with many more disruptive innovations to come.  Higher education, which is just starting to feel real pain from an out of control cost structure, may be next.

Oh, yeah, one other thing. As has been amply demonstrated, venture capital returns are power law distributed.  According to Marc, of the 4000 or so tech startups that get launched every year, 400 of those receive VC funding, and 60 of those funded make significant money.  In fact, the majority of returns come from just a handful of firms.  So, again, why would employee performance follow a bell curve?

 

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