Why Every Company is Now a Tech Company

Around 10 years ago, Marc Andreessen published a?famous article?on how tech companies were disrupting traditional industries that once seemed immune to change. As the argument went, tech companies were better positioned to leverage the power of the internet to deliver new experiences that were more convenient, accessible, and far cheaper for customers than possible before. Companies like Uber, Airbnb and Netflix could use the global reach of the internet to create economies of scale and unlock business models that simply could not have existed before. Software was eating the world.

More and more major businesses and industries are being run on software and delivered as online services — from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures. Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not.

This seems laughably obvious in hindsight. In a sense, software has eaten the world. The last decade has seen an explosion in startups trying to disrupt every conceivable industry from Finance, to eCommerce, to Healthcare, to Music, Entertainment and more. The incumbent tech players meanwhile have also expanded their reach and influence into all sorts of new verticals.?7 of the 10 largest U.S. companies?today are what one would typically consider a “tech” company.

However, a few other events have also played out in parallel. Internet companies are slowly realizing that in many cases their business models are not so much a replacement for traditional industries, as an extension. As vast as the reach of the internet might be, it is not limitless. And often, there are undeniable advantages to doing business "the old-school way".

Traditional players, meanwhile, have learnt to leverage their own strengths as they continue to invest heavily into technology and adapt to the competition. They're able to bring their unique competencies to the table and in many cases beat Silicon Valley firms at their own game.

All of this is to say that the lines between what is and isn’t a tech company are not quite as stark as what they were a decade ago. We are seeing a convergence of sorts as each of these companies leverages its own strengths in a bid to attract customers.

Netflix is perhaps one of the best examples of this. They were arguably one of the earliest pioneers in the streaming content market. They were able to build up a competitive moat by offering a virtually unlimited catalog of content for a low price. For years, Netflix was seen as one of the safest, stickiest businesses on the market. Once you signed up, you were all but guaranteed to continue paying them every month.?

But more recently, we have seen traditional players enter this market and take Netflix head on. Disney, in particular, has been able to leverage it’s own strength — its nearly 100 year old content catalog — to woo customers.?HBO,?CBS and?NBC?have all learnt to play the game as they roll out their own streaming services and attract a growing customer base. Netflix is meeting them in the middle as it invests in it’s own content production and even?releases it’s movies in physical theatres. As we are all slowly realizing,?content really is king.

But Netflix is hardly alone in this paradigm shift. Uber recently announced a?partnership with local taxis — combining Uber’s powerful mobile experience with the large inventory pool of the taxi industry — a move that would have been unthinkable just a couple of years ago. In a similar step, Airbnb?opened up their platform to traditional hotels - the very same ones they competed against for many years. Amazon too has continued to?expand its footprint?in the?physical?retail world (the?recent closures?not withstanding) while Walmart, Target and others steadily build out their own digital commerce offerings.

Simply put, consumers are not bothered by whether or not you consider yourself a tech company. They will take their business where they get the best selection, best content, or whatever else you might be selling. Consumers have come to take the convenience offered by the internet as a given. They expect, or rather demand, fast and frictionless experiences. And companies need to adapt, or risk going out of business.

While it is true that a lot of these innovations were first pioneered in the Silicon Valley, they are hardly confined to those borders. There is nothing stopping more established players from coming in and adding their own spin to the way things are done. In fact, it is refreshing to watch how different companies are able to innovate on their merits and create more choices for us customers. If the last 10 years have been about software eating the world, the next 10 are starting to look like they could enable even more innovation, and convergence of ideas. And as customers, we should all enjoy the ride.