Snippets: March 4, 2018. The Video Tidal Wave
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In our ongoing Snippets series on cost disease (aside from last week’s break), we’ve been spending time talking about industries that are getting more expensive every year, like higher education and health care. For whatever reason (and we’ve explored several), software and the internet just aren’t having the same “reorganizing” effect on those industries as they did on media, retail, and soon others like transportation. At least, not yet.
When we talk about “consumer-driven disruption” of both health care and higher education alike, one particular technology gets talked about an awful lot: video. Low-cost, reliable streaming video absolutely has the potential to substitute for existing expensive services in a way that’s nearly as good but dramatically cheaper: whether we’re talking about streaming lectures or group learning sessions, or ongoing low-risk communication between doctors and their patients. It’s quite reasonable to hold the hypothesis, “Surely there must be many situations where video is as good, or nearly as good, as ‘the real thing’ at a trivial fraction of the cost. Furthermore, that initial use case will be a wedge into transforming these industries in a bigger way, in a more consumer-first perspective than we get today.” How should we think about this opportunity? Are there any historical precedents in the history of the computer and internet era that could help us out?
I think there’s a pretty good hypothesis to be made here that video, including the rich image content embedded within it, could be the trojan horse technology that enters these established industries in an initially innocuous way, but then introduces the rails by which consumers interact with those services. If that’s true, we have a really good analogy from recent history to learn from: html. Benedict Evans over at a16z has astutely remarked that “Video is the new HTML”, and although he was mostly talking about media, the story may be even bigger for those industries that haven’t yet been rearranged by software. We can phrase our initial hypothesis this way: Video could be a tip of the spear that reorganizes consumer health care and higher education, in the same way that HTML was the tip of the spear that reorganized media and retail.
Starting from that hypothesis, let’s see from what we can learn from some primary source material — what smart people were recognizing about html at the time. A couple weeks ago, we learned an important lesson from a Jeff Bezos email from many years ago; this week we’re going to go back a decade further to a famous memo written by Bill Gates in 1995, called “The Internet Tidal Wave”:
The Internet Tidal Wave | Bill Gates memo to Microsoft, May 26 1995
(You can find a scanned version of the original paper memo here, although it’s somewhat hard to read.)
This memo has become famous as a major moment where Gates was starting to “get religion” around the web (his book The Road Ahead, which was still yet to come out, was long on Information Superhighway and pretty short on the open web, an error which got papered over in subsequent editions of the book.) A good chunk of the memo was the predicable kind of “Not only are Sun Servers better than ours, their website is better than ours; that’s unacceptable” comparisons, but there’s one critical line where Gates latches onto something fundamental:
“Amazingly it is easier to find information on the Web than it is to find information on the Microsoft Corporate Network. This inversion where a public network solves a problem better than a private network is quite stunning.”
As we knew even back then and can still appreciate today, one of the main reasons why was HTML. The relative simplicity and structure of html was such that even very rudimentary web directories and searching functions (we were still pre-PageRank at this point) could figure out an approximate idea of what was inside that html, what it meant, and how to find more things like them. And HTML turned out to be the vehicle through which all of the early companies leaping onto the web, who were not at all yet asking “how do I build an online business”, but rather, “how do I get my brochure, address and phone number on the website, so customers can find me?” The beauty of the public web, of course, was that now all this information could be searched, synthesized and aggregated publicly — opening the door for first the internet portal giants like AOL and Yahoo. Ultimately, the eventual winners like Google, Facebook and Amazon finished the job of completely rearranging the way media and retail work, around this new idea of abundant information. The Internet tidal wave was an information tidal wave, and HTML was the format in which that information could be found, digested and remixed. The value of all of the information, in many cases, was a great deal more than the sum of its parts. And the emergent value of that information, as it turned out, could not be captured by the incumbents, nor even controlled.
So this brings us back to video today. Three crucial things are happening. One, video consumption on the internet is already surging (which should surprise no one); two, we’re moving into the “Here and Now” paradigm of continuous live communication as a default media form; and three, computers are getting better at actually watching these videos and understanding what they see in them at a rudimentary level. In other words, the information content encoded in these videos, whose consumption is going through the roof, is not terribly different than the information encoded in HTML web pages in 1995. The tools that we build around understanding, digesting and remixing this video information are a powerful “peace dividend” that will doubtlessly get put to all kinds of new applications we can’t yet anticipate. And that inevitably includes our cost-disease ridden industries like education and health care. It’s just a matter of when.
So when we say “Video could help disrupt higher education and health care”, we don’t mean video as a format, we mean the information contained inside that streaming video format and the new ways of sorting, indexing and categorizing that information that we’re developing. HTML contributed to the disruption of media and retail not because critical business information or proprietary information was made public on the internet, but because the web created an entirely new forum for information to be created and distributed, de novo, that ended up being the battleground that mattered. HTML web pages were “lower quality” than a 1990s business’s in-person sales and marketing channels, in the same way that video could be “lower quality” than in-person medicine and higher ed. But when the volume of this information goes up by a factor of ten, or a hundred, or a thousand — and where the value of that information in aggregate is much greater than the sum of its individual parts, interesting things start to happen. Sometimes it takes a long time — in Gates’s case, going through a boom and bust through 1999 and 2000 out through into the new millennium — but what emerges out the other side surprises everybody. As he said famously, “We always overestimate the amount of change that will occur in the next two years and underestimate that will occur in the next ten.” It was true for the Internet tidal wave happening then, and it’ll be true for the Video tidal wave happening now.
Tariff or no tariff, rooftop solar is getting more cost-effective anyway:
First Solar speeds ahead as tariffs hinder the competition | Julian Spector, GTM
2017 Solar Installer Survey: solar panel; battery demand is surging | EnergySage & NABCEP
Performance reviews:
Why I quit Google to work for myself | Michael Lynch
Performance of Performance reviews | Steve Sinofsky
The biggest family tree ever constructed:
Colossal family tree reveals environment’s influence on lifespan | Erika Check Hayden, Nature
Survival:
GitHub survived the biggest DDos attack ever recorded | Lily Hay Newman, Wired
Staying Alive: the great Pinball revival | Steve Almond, Southwest Magazine
General Adversarial Networks are getting scarily good:
Other reading from around the Internet:
Business lessons from Jim Clark (Silicon Graphics, Netscape, etc) | Tren Griffen
Greenbacks: the most loved, forgotten currency of the United States | Kaz Nejatian
Donald Glover can’t save you | Tad Friend, The New Yorker
Smithsonian Magazine’s 2017 annual photo contest: finalists | Smithsonian Magazine
In this week’s news and notes from the Social Capital family:
The world is a very big place, and some of the most important battles to solve hard problems and create great companies are being fought outside the United States and China. One of those settings, of course, is India: as hundreds of millions of Indian citizens come online over this and next decade, the country is poised to leapfrog much of the west’s traditional infrastructure and proceed directly to 21st century ways of living, transacting and consuming. For example, although you may not know it by name, you’ve probably heard about Aadhaar, the Indian government’s biometric ID program. About 90% of Indian citizens are currently enrolled in the program, making it easily the world’s largest biometric enrolment system and kicking off an arms race between payment processors and digital wallet companies to build transaction infrastructure on top of it.
Therefore, it’s a pretty big deal that this past week, Ezetap announced the official release of Ezesmart: the first Aadhaar-enabled point-of-sale system for Indian merchants. As co-founder & CTO Bhaktha Keshavachar told Inc42: “Ezesmart is the culmination of our belief in India’s digital growth story. We have invested time and effort to build the first and truly integrated payment acceptance platform in India. The successful launch of EzeSmart is a reaffirmation of our belief that India is years ahead of the most developed countries in terms of our innovation in the fintech ecosystem.”
Ezetap launches aadhaar Pay enabled POS terminal Ezesmart | Pratik Bhakta, ET Tech
MPOS startup Ezetap launches GPRS, UPI and EKYC-enabled EzeSmart solution | Supitra Anupam, Inc42
What does this mean? It means that people in rural areas can send and collect digital payments just as easily as someone in more networked urban areas. It also makes Know-Your-Customer rules, which are often sporadically enforced, much easier to comply with. And it opens the path to sophisticated payment applications, like the Bharat QR code system, to work seamlessly between any merchant and anyone with a smartphone. There’s no doubt that the Indian payment ecosystem will continue to evolve at its current breakneck pace, but Ezetap has carved out an impressive piece already, and Indian consumers and merchants alike are winners because of it.
And finally, last week as you recall we were delighted and fortunate to see so many companies in the Social Capital family get recognized on Fast Company’s annual 50 Most Innovative Companies list. Social Capital was also featured alongside them (in “Finance”, between Square and Stripe), and a longer Fast Company feature on what we’re up to at Social Capital came out just after Snippets got sent to your inboxes.
It’s a great read that really captures what we’re trying to accomplish at Social Capital, and features the hard work of Ashley, Ray and the other members of the platform team who are building the underlying software that makes it work. Be sure to give it a read, and stay tuned for more announcements coming up.
Have a great week,
Alex & the team from Social Capital
