Who wins in the Late Internet Era?
We’ll narrowly define “winning” in the financial sense, as investors, employees, or founders. Under a broader definition, of course, “winning” may mean one should exit stage left and become a surf instructor in Fiji. But if that’s what you care about, why are you reading a post about winning in Silicon Valley?
We should first acknowledge that we’ve entered the Late Internet Era. Carlota Perez defines a technology adoption cycle along an S-curve (left) lasting about 50 years in her book Technological Revolutions and Financial Capital.
Written retrospectively in 2003, it doesn’t capture the steeper technology adoption curves of the 21st century, but developed countries are unmistakably nearing the end of the Internet adoption life cycle.
Perez’s graph captures a single variable, technological adoption, which happens on a fairly predictable curve. But it doesn’t capture the massive demographic and cultural shift between each phase — each phase of the cycle has a different makeup of players, and consequently different rules.
Mary Meeker’s 1996 Internet Report paints the greenfield opportunity of the Internet, driven by a variety of products including “data networking equipment specialized for the Internet, Internet Service Providers, security equipment and software, Internet applications software, transaction processing, segments of the enterprise software market, information provision, information aggregation services, online and offline publications, and online commerce” (1–12).
This blue ocean meant founders could pursue a variety of strategies without needing to conform to social norms or a standardized playbook. Success came to seemingly anyone who worked hard and thought for themselves.
But in the early 2010s, the culture began to change. More IPOs and acquisitions drove an outbreak of Founderism: the cultural obsession with being a founder. The attributes of the early 2000s outcasts — hoodies, sneakers, Macbooks — became culturally dominant. A natural selection of sorts.
As Founderism gained popularity, more people were going after the same chunk of opportunity. And there was so much of it that nobody needed to focus on the next frontier.
The Lean Startup methodology was popularized during phase two and three of the Internet’s adoption cycle for a reason — if you’re blindfolded in a room full of piles of gold bars, you only need to pivot a few times to find a pile. This strategy worked at the time of the publishing of The Lean Startup, at least retrospectively, but it was getting harder.
So what’s different towards the tail end of the curve? When there’s fewer gold bars, searching the room using an iterative approach no longer works. The search process requires more savvy. The optimal strategy today is search and destroy — develop a centimeter-resolution map of the room before entering, and determine the exact path to the single gold bar you feel most confident will be there.
There’s a certain type of person who’s uniquely good at this: the hustler. Its etymology stems from Dutch’s hutselen — “to shake up”. Like shaking the tree for any remaining fruit at the top.
A hustler isn’t a technologist, per se, but rather the king of search a destroy. A master of picking up tips and moving quickly to seize any pocket of opportunity. Not a heroic victor, but still a victor.
Hustlers should bring a series of more calculated, smaller victories during the Late Internet Era. I’d expect two things from companies started in the late 2010s:
- A higher proportion of founders of $1B+ companies will have operational, not technical, backgrounds.
- The distribution of company valuations above $1B will shift downwards.
You may be thinking: I’m not a hustler, what should I do? If you’re a deep technologist, I’d encourage you to look beyond the Internet towards the next technological cycle which, according to Carlota Perez, should be happening any minute now as we round out the Internet curve. Probably not blockchain, but more on that later. You could still compete for the remaining slivers of opportunity in the Internet cycle, but you may find that your technical know-how acts as a less meaningful advantage.
I’m new to blogging, so I’d like to open it up for discussion — who do you expect to win in the Late Internet Era?
