Andre Staltz on the new tech business environment

I promised a post on this piece. Here goes. He writes,

GOOG’s goal is to gather as much rich data as possible, and build AI. Their mission is to have an AI provide timely and personalized information to us, not specifically to have websites provide information. Any GOOG concerted efforts are aligned to the AI mission.

Try a search for mortgage calculator. Once you scroll past the ads, what you get is. . .a mortgage calculator! It used to be that all you got were links to web sites. The new approach is very convenient if you want to figure out a monthly payment, but not so nice for all those web sites that put up mortgage calculators to try to attract visitors.

This suggests that Google has reached the cannibalization phase of the O’Reilly cycle. Staltz seems to think that it has. But if Google eats all of the revenue without sending you to anyone’s web site, then I presume people will stop putting up web sites. And in that case Google is going to have less new data to mine to produce answers to queries.

He speculates,

There would be no more economical incentive for smaller businesses to have independent websites, and a gradual migration towards Facebook Pages would make more sense.


There is a tendency at GOOG-FB-AMZN to bypass the Web which is motivated by user experience and efficient communication, not by an agenda to avoid browsers. In the knowledge internet and the commerce internet, being efficient to provide what users want is the goal. In the social internet, the goal is to provide an efficient channel for communication between people. … Already today, most people on the internet communicate with other people via a mobile app, not via a browser.

Some random thoughts:

1. For me, it’s starting to sink in that this is not 1997 any more. Smart phones are more closed and proprietary than was the Web. At this point, artificial intelligence and machine learning seem to be mainframe-like, favoring established giants, rather than PC-like or Web-like, favoring upstarts.

2. Google, Amazon, and Facebook may already have entered the cannibalization phase.

3. Content creators have always whined that they deserve more income. But the idea that “content is king” was baloney sandwich from the get-go. I can remember almost twenty years ago hearing Ted Leonsis (AOL) say that “convenience is king.” And now Staltz is telling us that the Web is just not convenient enough to cut it these days. Facebook is going to help us connect over mobile devices. Google is going to give us information directly. Amazon is going to enable us to order stuff without using a personal computer.

4. My counter to Staltz’s dystopian forecast is to suggest that effervescence is king. Effervescence in tech means that lots of talented people are working on stuff. Personal computers were effervescent in the 1980s. The Web was effervescent in the 1990s and early 2000s. The smart phone became effervescent when Apple encouraged app development. Cannibalization and walled-garden strategies kill off effervescence, and when you kill off effervescence, that leaves talented, driven people with a need to find an outlet. At some point, they will succeed, and then today’s giants will be cut down to size.

This entry was posted in business economics and tagged . Bookmark the permalink.

4 Responses to Andre Staltz on the new tech business environment

  1. taimyoboi says:

    What if today’s giants are able to use AI and machine learning to create new (walled-off) gardens or find the next outlet before the effervescent folk do?

    • Handle says:

      Do they even need “Big deep AI machine data neural learning” or whatever?

      The question is, even in “effervescent” fields like software, is there a tendency for certain companies, protocols, formats, etc. to become entrenched monopolies? Of course, if certain leading companies keep leading on quality, capability, and value, then it’s hard to know whether they are earning their position by keeping competitors at bay.

      On the other hand, when a company delivers low quality products at premium prices and seems to be able to get away with it year after year, well, that’s more of a candidate for the case I’m worrying about.

      Let’s consider Microsoft. Where I work, Microsoft products dominate everything: everyone uses Outlook and Office and SharePoint and Lync and so forth. And the OCIO, to include many of the the CIOs themselves, is full of Microsoft revolving-door folks . The one exception is Adobe for pdfs.

      I don’t want to restart the whole interminable debate about the quality of these pieces of software, but suffice it to say that few people I work with are very happy with them, they seem to be completely stagnating, they cost a small fortune, there seem to be alternatives of superior value (e.g., Google products), and yet there just seems to be no way to coordinate to escape the Microsoft/Adobe gravity wells.

      What I’m worried about is that given the “zero marginal cost” problem for software, there are really only two kinds of businesses in that sectors, those that will have a good amount of competition, and as a result can’t possibly make any money (maybe these are a version of “the unseen”), and those that make money, which means that’s only because they win some kind of game where the leader is able to rely on some kind of special source of market dominance.

      One thing to notice is that even the huge companies with infinite human and capital resources seem to really quickly give up and abandon efforts altogether when they try to take another huge competitor on and don’t achieve immediate positive results establishing a new competitive equilibrium. We see a competitive equilibrium between Ford, GM, Honda, Toyota, etc. But in big tech we see a lot of situation in which the industry is really dominated by one, or sometimes two, companies.

      It’s kind of like US politics. Some people say we have a “two-party system”. But that’s not quite true. We have a “one-or-two-party system.” In certain areas, one party completely dominates, and the axis of debate lies almost entirely within the factions of that party. In other areas, there is more active competitive between the two parties, but given the nature of the game and competition, there is almost never any serious role for third parties. It seems some tech areas are like that, like certain sectors are “one-or-two-company spaces.”

  2. collin says:

    he smart phone became effervescent when Apple encouraged app development. Cannibalization and walled-garden strategies kill off effervescence, and when you kill off effervescence, that leaves talented, driven people with a need to find an outlet. At some point, they will succeed, and then today’s giants will be cut down to size.

    How do you know. It seems like Google, Facebook or Amazon have incredible to hire the best and the brightest.

    One note on Google, Facebook or Amazon, there may be the QWERTY reality which was developed for the typewriter but might not the best on the computer. And everybody is growing up using their systems and might not want to change like the keyboards.

Comments are closed.