Why you should care about software (for disinterested people).
I find this is the most common story I tell non-tech people. It’s the answer to the question “but isn’t this just like the gold rush? How is it sustainable? Why are you recommending I get into technology?”
TL;DR: Software is eating the world.
But what does that actually mean? You and me, we’re going on a journey together to find out.
Software replaces people
The long and short of the ‘software is eating the world’ thesis is that software is gradually replacing stuff that was done outside of software before. Uber is such a goddamn great example of this that it would be criminal not to use it.
Hailing a taxi used to be a manual process: stand on street; raise your fucking arm in the air like a lunatic; wait for a taxi to somehow notice you and stop (and good luck if you’re a PoC). How hilariously inefficient.
Enter Uber! Now I ‘hail’ a taxi through software, while I’m still naked playing Call of Duty in my living room. If it’s raining outside I don’t have to get wet. If I’m in a bar in a dodgy neighbourhood I don’t have to take my chances on the streets. Most importantly I get to be naked for longer. Software has replaced this manual process because it’s simply way way better for the consumer than the manual alternative.
Some other obvious examples are:
- Airbnb (make home-owners hotel-owners through software)
- Twilio (make phones into APIs through software)
- Zenefits (HR teams into software)
- Kickstarter (find arts patrons through software).
Some less obvious examples can be found in:
- agriculture (FarmLogs et al moving farms from manual data-entry to all their data living in the cloud)
- healthcare (patient records on iPads)
- etc etc etc.
Software is eating the world.
And it’s not just the consumer improvements that matter. It’s also Capitalism, people.
In addition to being just better for customers, software is the best business model that has ever existed. OK maybe except for the pyramid scheme.
For a little real-world example, let’s look at my handsome and manly father. He has run various commercial real estate companies over the years. We speak fairly regularly about business, and the thing that always amazes both of us is how much capital he has had to invest in his business (many tens of millions of sunk costs in his actual office buildings) in order to generate 5–6 figure monthly revenue. In contrast, my company, Rainforest, is doing mid-5 figure monthly revenue with less than 2 million dollars of capital deployed, and having been around for scarcely 3 years.
Whoa even I got bored by that paragraph. It’s important though. But wai?
The advantages of starting a software company:
To start a non-software company like a bread shop I have to have the money to rent the space, buy the equipment, hire the people. Total cost to start making money = ~$100k+.
To start a software company like Zendesk I have to have an idea and then make that idea into a product on my laptop. Total cost to start making money = ~$1k for the laptop MAX.
The advantages of scaling software:
To serve more customers at my bread shop I have to add cashiers. One cashier can serve 10 customers per hour. To double my volume to 20 customers per hour I have to double the number of cashiers. At some point the bottleneck becomes the amount of bread I can bake, and I have to add another shop. Oh and I have to locate this new shop really carefully so people happen to actually walk past it while wanting to eat bread-y things. Imagine this at Walmart scale and you start to see that it really fucking sucks to scale a non-software company.
To serve more customers at Zendesk I have to do… nothing. To extend the cashier analogy, one developer can build a checkout feature on Zendesk to enable infinite people to pay. And even if that’s not quite true (it’s actually pretty hard to write software that scales to tens of thousands of people) it’s basically true. Software is essentially a non-rival good and therefore my consumption of Zendesk doesn’t impact your consumption of it. Versus my consumption of bread means you don’t consume that same bread. God I’m getting boring again. Main point is to double my customers I don’t need to add any more developers. Aka it’s pretty damn easy to scale with software.
So yeah, capitalism. Alongside software making stuff easier for consumers, it’s also the only business model that you should invest time in if you have a brain (and are optimizing for value creation).
Cool, so we know that this software thing is replacing people. But hasn’t that happened already? Aren’t we donezo on the whole gold rush thing?
No. By my totally-made-up estimation we’re around 20% of the total penetration of software into our lives. That means that ~80% of the software that will eventually exist is yet to be built.
Think about all the things that we still do manually and inefficiently today:
- basically all food preparation
- basically all agricultural production
- city planning
- finding romantic partners (OH HAI Tinder)
- choosing products to buy
There’s a long long list. And all of these will eventually be replaced by software.
So what so what?
Software is here to stay.
Therefore demand for people and things that help build software will continue to outstrip supply until we’re at 100% software penetration. Therefore you should be betting on software.
Switching into life-advice mode, if you’re optimizing for impact and / or wealth, software is the only sane option.
What does that mean for my life?
The key thing that I’ve realized having the above conversation tens of times over the past few years is that most people are not optimizing their professional lives for impact and long term wealth.
They optimize for things like career stability, medium-term financial certainty, importance, job title, impressiveness to friends / family, etc. Not for impact and long term wealth.
However, if you’re one of the relatively few people who is capable and willing of rethinking your career plan from first-principles, I advise you to figure out how you can tie your career to software.
If you do decide to do that I’m happy to help! Toot me @fredsters_s.