Hunting the Four Horsemen of Tech
Google, Facebook, Apple, and Amazon.
The Four Horsemen of Tech. All have market capitalizations in the hundreds of billions. All dominate a giant category while having meaningful investments in emerging technology like AR/VR, autonomous vehicles, voices, AI, and so on.
Conventional wisdom has it that these four companies are unassailable in their core market, and that economic and policy forces are making them even more entrenched. Why would startups even try to take on the likes of Amazon, Apple, Google, or Facebook?
Conventional wisdom is wrong. Just rewind a few decades to see why.
Innovation Before Google, Facebook, Apple, and Amazon
One to two decades ago, people said the same things of Microsoft, Cisco, Yahoo!, Oracle, and Dell.
Now, Yahoo (excluding the Alibaba stake) is a shadow of its former self. The others remain solid, if uninspiring, corporations trying to reinvent themselves with varying levels of success. Only Microsoft remains in the same league as today’s Four Horsemen in terms of market cap (i.e. $400B+).
Some would say today’s Horsemen are better equipped to survive future disruption. But this time isn’t different. (It rarely is.)
History is littered with examples of companies going from utterly unassailable to an afterthought.
Digital Equipment. Wang. Xerox. Fairchild Semiconductor. Atari. Kodak. SGI. Sun Microsystems. All gone the way of the dodo. Even HP, IBM, and Nintendo are still with us but are virtually afterthoughts.
I’m not suggesting you go run out and short the stocks of Facebook, Amazon, Google, and Apple, or ignore them as competitors. None of these companies is going away in the next 10 years.
What I am saying is we can bank on innovation happening — and its inevitable creative destruction.
What Might Unseat the Horsemen in the Next 10 Years?
Predicting exactly how the future of technology will unfold or who will be the winner is absurdly hard to do — but I have some hypotheses:
- New computer platforms emerge: This one is probably the most obvious. The shifts from mainframe → minicomputer → PC → server/client → cloud/mobile have been tectonic, and pretty much no incumbent has remained dominant across more than 1–2 shifts. Yes, Google has immense resources (both human capital and cash) and is desperately executing a “bet on everything” strategy (Alphabet reorg and investment AV, drones, AI, AR/VR, next gen broadband, etc.) to try to overcome the innovators dilemma. But something will inevitably displace search.
- US dominance is reduced: The US remains the preeminent center of innovation globally and the largest economy in the world. At least one of these statements is unlikely to be true in the next 1–2 decades. Yes, the Four Horsemen are global corporations, but they are still fairly US-centric in their leadership and operations. The “next” Google or Facebook or Amazon may not be founded or based in the US.
- Antitrust considerations come to bear: Ask Microsoft how this can play out. Or if you don’t have the context of the late 1990’s, read up on “United States v. Microsoft Corp.”
- Complacency: The leaders of Amazon, Google, Facebook, and Apple are all remarkable individuals. Three of the four companies are still being run by their founders, and someone like Mark Zuckerberg still has many decades ahead of him in his career if he chooses. But inevitably, leaders and organizations as a whole can lose the zeal that made them exceptional in the first place.
Which of the Horsemen Might Survive?
If I had to bet on one of Amazon, Apple, Facebook, or Google over a 10–20 year period, I’d bet on Amazon. At one level, Amazon has the lowest profit margins or revenue per employee or other measures that typically indicate a technological moat around their business.
But Amazon’s durability arguably comes from not being intrinsically linked with one main technology.
Reasonable people can speculate on how long smartphones, web search, or the social graph will be dominant technologies. But undoubtedly, they will all be superseded at some point. Commerce is as old as the dawn of human civilization — it’s unlikely to be going anywhere soon.
Amazon has also arguably been the only one of these four companies to build a $10+ billion-dollar business (AWS) that’s truly separate from its core business.
Apple’s “online services” business is non-trivial, but it’s intrinsically linked to its smartphone dominance. If iPhone were to be superseded, it’s highly unlikely consumers would flock to Apple for photo storage, email, etc.
Regardless of my predictions, the takeaway here is that no incumbent is too big to fail — even today’s Four Horsemen of Tech. Whether they’re taking on Amazon, Apple, Google, or Facebook in their core businesses or in the next wave of technologies, startups have a real shot of making it. It doesn’t mean it won’t be hard, but it can be done. The next Google is unlikely to be the current one.