InnovationRay Kurzweil

Software will eat the *whole* world

By January 31, 2012 5 Comments

Back in August Marc Andreessen wrote an article in the Wall Street Journal explaining why Software is eating the world. His main observation was that the fastest growing companies in almost all industries are betting their future on software. He gave several examples of which the best two from a breadth of industry perspective are Amazon and Disney/Pixar:

Perhaps the single most dramatic example of this phenomenon of software eating a traditional business is the suicide of Borders and corresponding rise of Amazon. In 2001, Borders agreed to hand over its online business to Amazon under the theory that online book sales were non-strategic and unimportant.


Today, the world’s largest bookseller, Amazon, is a software company—its core capability is its amazing software engine for selling virtually everything online, no retail stores necessary. On top of that, while Borders was thrashing in the throes of impending bankruptcy, Amazon rearranged its web site to promote its Kindle digital books over physical books for the first time. Now even the books themselves are software.


The best new movie production company in many decades, Pixar, was a software company. Disney—Disney!—had to buy Pixar, a software company, to remain relevant in animated movies.

The ‘software companies win’ trend is highly visible in many other industries as well – e.g. entertainment (Netflix, Zynga), music (Spotify), direct marketing (Groupon), telephony (Skype), and recruitment (LinkedIn).

I’m thinking about this today after attending a one day session of the Singularity University (SU) in Rotterdam yesterday. The Singularity University was founded by Ray Kurzweil and Peter Diamandis to “assemble, educate and inspire a new generation of leaders who strive to understand and utilise exponentially advancing technologies to address humanity’s grand challenges”. That’s a big vision and yesterday was an inspiring day. Kudos to Yuri van Geest for putting it together.

“Exponentially advancing technologies” are the three most important words in the SU vision. The most famous exponentially advancing technology is computer processors whose power doubles every 18 months (Moore’s Law) but many other industries are now progressing at similar rates. The folk at SU have done a lot of work on this and it turns out that once an industry becomes digital then it jumps onto an exponential progress path and stays there. Computer processing power has been improving exponentially for over 100 years now.

Before I go on I want to take a moment to dwell on the implications of exponential progress. The physical world in which we evolved operates linearly and our brains are hardwired to think accordingly, and because we extrapolate linearly we routinely under-estimate the impact of technologies that are growing exponentially. Global phone penetration is a good example of technology that grew exponentially and analysts routinely made projections based on linear extrapolations and saw the market come in ahead of expectations. I need to look at the data, but it seems to me that the same thing might be happening to mobile advertising now. Underestimating a market generally means missing an opportunity.

I think there is a link between software eating the world and digital industries enjoying exponential growth. Software is digital, and industries that are dominated by software will innovate and grow faster, and, most importantly, the players within those industries that move towards software first will out-perform the laggards.

We spent a lot of time at SU yesterday discussing how biology and healthcare are becoming digital industries. The cost to sequence a human genome is now around $1,000 and is falling by up 80% a year and there are new technologies for synthesising and manipulating DNA which are abstracted from the physical process. Innovation in healthcare is moving from being expensive, lab based, and rooted in manual process, to inexpensive, office based and rooted in digital process. In other words it is becoming software oriented and will move onto a path of exponential improvement. This is tremendously exciting from the perspective of startups, and of world health :). The applications will be both medical (better, more targeted drugs) and health oriented (e.g. diets customised to your genetic profile, low carbs for one, low fat for another). This is still futures, but it is no longer too far out.

3D printing was also prevalent on the agenda, because 3D printing makes industries digital. We saw details of a conceptual design of a 3D printer that prints houses – one ever 1.5 days. Similarly printers for meat and even human organs are in the works.

Back to the bigger picture, if biology can be understood, modelled and manipulated digitally, and 3D printing advances as expected then almost every industry is vulnerable to digitisation and innovation will become software based. The importance of software will be even more widespread than Marc Andreessen imagined.

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