Competition, Creative Destruction, and Renewal

The level of competition in the technology industry is a beautiful thing to behold, and it is on full display these days. No market position is ever secure due to rapid technology advancements, easy capital access, and fluid labor markets. Operating a company at this pace is tough – and the opportunity for startups is evergreen.

NVIDIA and Antitrust

IBM seemed untouchable in the 70s and 80s, dominating every computing market. I haven’t used an IBM product in years.  Startups and competitors chipped away at every computing market, ultimately displacing IBM.

Intel looked unassailable in the 80s and 90s.  Moving the industry off the x86 platform looked impossible.  And now, well, the Intel x86 platform is losing ground everywhere and Intel is struggling to find a path forward.

Microsoft looked invincible in the 90s and was judged a monopoly.  Windows dominated everyone’s strategic thinking. And then mobile and the cloud nearly broke the company — hats off to Microsoft for navigating this well and finding a path to relevance and growth.

Now, NVIDIA looks unassailable, and the government is investigating it for antitrust.

We need effective and aggressive antitrust policy — long-term concentration of power damages markets, consumers, and society.  But it sure seems like the tech industry is pretty good at attacking and destroying concentration of power all on its own. Going after NVIDIA doesn't see like the best use of our antitrust resources.

While NVIDIA is doing great, most of the computing we will do is still in the future, and most of the software we will use is still to be written — it is very tough for a technology leader to retain their position against the tide of future innovation.

Anandtech

Tech media is not immune to the waves of change in the industry. Anandtech is wrapping up.  It’s been a great resource, and it’s bittersweet to see that it has ended, like so many other tech publications over the years.

Back in the day, I loved Byte; I absorbed it from cover to cover; I wish I had kept all those old issues.  You can still apparently see them all online.  Byte got me unreasonably excited about Forth back in the day.  The Smalltalk issue blew me away; I was coming to computers as an EE from the transistor up, and this issue opened my brain to a bunch of higher-level software abstractions.  Creative Computing was another great early magazine, with code samples you could type in and try out!  Later, PC Magazine became a mainstay, as were MacWorld and InfoWorld.  Everyone in the industry read all of these; they provided an excellent “commons” of news and articles that connected us all.  It is always sad to see their passing; we lose some connectivity between all of us.

But Schumpeter rules, and each generation will create its new goto sources, using new media types and old.  There is always a demand for thoughtful commentary, analysis, and coverage.  I love Stratechery, for instance, absolutely great analysis of what is going on in the industry.  Ethan Mollick is writing some indispensable analysis of AI tools.  Techmeme, of course, is a great news aggregator.  There are podcasts, YouTube channels, and other forms of coverage arising.  It is a time to create new content, not to lament the passing of the old.

Software is eating the car

The intensity of tech competition has fully spread into adjacent industries. As software increasingly defines the modern vehicle, traditional automotive OEMs struggle to keep pace – witness GM software layoffs and VW software challenges.  The automotive OEMs keep hiring and rejecting software DNA — because, at the leadership level, they keep tolerating the old fiefdoms and practices.  Meanwhile, software-forward companies like Tesla, Rivian, and all the new Chinese entrants are iterating quickly.

In the late 80s, PC software complexity grew dramatically as Moore’s Law delivered more and more computing power to the desktop, and network connectivity expanded dramatically. Microsoft hired Dave Cutler and a team from DECwest to build the next version of Windows.  Much has been written about this.  Several stars aligned to allow this to happen:

• Microsoft leadership (Billg) realized that a dramatic step up in technology would be necessary to realize Microsoft’s ambitions.
• The Microsoft culture at that time was welcoming of great technical talent.  The new team forced a reconsideration of current OS efforts and many reorgs, but no one was hugely upset; everyone saw the benefit of having incredible new brains working at the company.
• Microsoft had the equity to attract and reward world-class technical talent.  

The forces of leadership, culture, and equity all aligned.

I am reminded of this as I read articles like How Software is Eating the Car.  150M lines of code, software from hundreds of suppliers, and a massive and growing amount of computing power.  The traditional OEMs, with their traditional supplier networks, have hit the wall.  Competing will take a complete restart of the automotive software and hardware stack.  However, the stars are not aligned for traditional OEMs.

• They need a dramatic investment in software and system architecture.  This will require a complete reboot of systems architecture and tearing apart of their Tier1 relationships.  They haven’t had the leadership to do this.
• They need to welcome great software technical talent.  They need to allow software teams to come in from the outside and drive radical transformation of system design.  
• They need to have the equity to attract world-class technical talent.  Traditional automotive companies do not hand out equity this way; they do not offer significant equity compensation packages for architects, principals, or senior engineers.

Auto OEMs need to make a DECwest-style hire to shake themselves up — inserting a world-class software team right into the middle of their automotive design effort, a team with the chops and mandate to change everything about computing and networking in a car.  And that will take significant leadership energy and cultural change.

Writing and learning

Writing forces us to distill complex ideas into our own words, cementing our understanding. David Perell elaborated on this in one of his newsletters:

…you learn best when you explain something in a new medium. So if you read something, you should explain it in a video or a drawing instead of writing about it. When you translate ideas from one medium to another, you can no longer rely on a lot of the handicaps that help you work faster but ultimately inhibit learning. This quote from Piaget doubles as a core principle of the company: “The essential thing is that in order for a child to understand something, he must construct it himself, he must re-invent it.”

This week, I had no idea that my theme was competition and creative destruction until I started writing and thinking more deeply.  I recommend writing for any committed lifelong learner.