Technology Networks and The Smartphone Tipping Point.

Just today, Apple became the first $1.025 trillion company. Neil Cybert (Above Avalon) has a good post out dissecting Apple’s continuing growth story (Neil does leave out a most important piece of it – retail…but that is for another post).

Floodgate Partner Mike Maples has a great post out explaining why ‘Network-Based Businesses Will Disrupt All Sectors of the Economy

As Mike explains:

Smartphones were the tipping point. Now a device that was smart and connected could be used by billions. Once we had a world where computers and connectivity were pervasive, the “tech industry” was no longer part of the economy…for the first time, software-defined networks became the animating force of the economy.

As Mike sees things, it is no wonder Apple was the first company to $1 trillion!

Mike Maples is a great investor and venture capitalist (Twitter, Twitch, Lyft, Okta) who had a great investing thesis when he started ten years ago – The most valuable businesses of the future would be networks, rather than traditional companies.

Today he is convinced that:

Software-defined networks will be the most valuable businesses, displacing traditional corporations as central actors.

Networks can bring exponential improvements in prosperity throughout the world.

Networks will encounter fierce resistance from traditional businesses, governments, and other parts of society that don’t want a different future.

Tech leaders are part of the problem, and this needs to change for networks to realize their full potential.

Mike explains that we have moved from an era of companies to networks:

Free-market capitalism has recently come under fire, so it’s easy to lose sight of the miracle of the last 200 years. Technologies of the railroad and steam engine, combined with financial innovations of a stock market, made it possible for big companies to drive extraordinary breakthroughs. Prosperity leapt massively forward. The worldwide standard of living increased 14-fold from 1800 to 2000 — the most in human history by far.

Networks are even more powerful because their foundations are even stronger. Large corporations leveraged mass production, mass distribution, and economies of scale. Networks leverage mass computation, mass connectivity, and network effects. Because computation and connectivity improve at exponential rates, the owner of a network has insurmountable advantages over the owner of a traditional corporation.

It is no wonder that this tech boom keeps getting called a ‘bubble’. In fact, it is the reasons Mike explains in his post that bubbles keep showing up in sectors of the technology economy (3D, VR, Crypto) while the technology index itself continues to chug along.

Mike ends his piece explaining that this shift to networks will be messy:

Greatness is a decision. So is a better future. Moore’s Law and Metcalfe’s Law are exponential, which means they can bring abundance to everyone on earth. We can repeat the miracle of the last 200 years, but faster and with less impact on the environment.

Whether you are an entrepreneur, corporate exec, financier, or government official; whether you are in Silicon Valley or Beijing, Shanghai or Caracas, Peoria or Zug—harnessing the power of networks is one of the most important duties for those who want to create prosperity and fulfill our potential in the coming future.

Howard here…Mike is saying no matter how great the tech and power of the networks really is…we need better people. This is a huge wildcard of course because as my friend (and excellent investor) Phil Pearlman likes to say:

Here’s the thing about behavioral economics.

People are crazy.

Have a great Friday.


Also published on Medium.