Thinking mode-software devours the world+1

According to the Wang Chuan website of Silicon Valley,

1, data is the fuel of software.

Software is devouring the world. At present, the companies with the largest market value, such as Google, Apple, Amazon and facebook, are essentially software companies. The key to the problem is to see clearly in advance which company's software will devour the world more in the future. If data is the fuel of software, then one angle of analysis may be, which software company has a decisive advantage in the collection of key and important data?

2. Body and consciousness are separated.

An example of software devouring the world: more and more software, whose code has nothing to do with the underlying hardware. The appearance of containers made the trade volume of industrialized countries increase seven times in 20 years. When the program code runs on a virtual machine and is independent of the hardware architecture, its economic impact is far greater than that of the container. Now even many traditional communication functions of the underlying hardware operations are virtualized and converted into software control.

The world of software connectivity doesn't care about changes in the underlying hardware. Just like the atoms and molecules in a person's organism, they change every few years, but the individual's self-awareness and identity are consistent.

3. The number of employees depends on the value.

The world's largest hardware company, with only three companies with a market value exceeding 1000 billion. Intel,100000 employees,160 billion dollars. Samsung, with 320,000 employees,150 billion USD. Cisco, a network equipment company, $65,438+$037 billion. Seventy thousand employees.

Hewlett-Packard, which makes hardware, lost nearly three-quarters of its market value this year, with only $22 billion and 3 1 10,000 employees. Emc, which makes storage hardware, has remained unchanged for five years, with only $50 billion and 70,000 employees. Google, a software company, has a market value that exceeds the sum of Intel+Samsung+Cisco, but only 60,000 employees, less than one-eighth of the three.

4. The virtual world devours the real world.

1. Software devours hardware. 2. High-level (reusable, application layer) software devours low-level (non-reusable, bottom layer) software. 3. The virtual world devours the real world.

5. Software devours the world.

Software is devouring the world. Software is devouring the world.

This sentence originally came from an article published by mark anderson, a venture capitalist and former founder of Netscape, in The Wall Street Journal in August 201/.

Let's take a look at the software and hardware companies of science and technology in 20 15.

( 1)

On the last day of 20 15, the top six companies in US stock market value were: Apple, Google, Microsoft, Buffett's Berkshire Hathaway, ExxonMobil and Amazon. Their market value ranges from $300 billion to $600 billion.

Apple, Google, Microsoft and Amazon are essentially software companies. Some people will say that Apple sells hardware, but the software ecosystem of Apple's iTunes, iCloud and AppStore is the core of its control over users.

Once ridiculed as a "bookstore made at night", Amazon has now become an "IT company that sells books by the way".

(2)

Compared with software companies, there are only three listed hardware companies whose market value exceeds $ 1000 billion:

Intel, market value160 billion USD, employees100000.

Cisco has a market value of130 billion USD and 70,000 employees.

Samsung has a market value of160 billion USD and 320,000 employees.

As a software company, Google has a market value of more than 500 billion dollars, which exceeds the sum of the above three hardware companies, but its 60,000 employees are less than one-eighth of the employees of the above three companies.

Hewlett-Packard was founded before World War II, and started with hardware, mainly dealing with computers, printers and other hardware. Its revenue once dominated Silicon Valley, with nearly 300,000 employees. But the market value is only about $20 billion, less than one-third of that of a year ago.

In the computer hard disk industry, the storage capacity per unit area increased by 65,438+0,000 times in the decade of 1990s, but the price dropped by 70%. At the end of 1990s, the three major hard disk companies invested $6.5 billion in research and development, but everyone lost $800 million. Roger johnson, the boss of Western Digital, a hard disk company, called the hard disk field "the longest industrial charity".

Why is there such a huge difference? Why do software companies dominate the world economic structure?

(3)

Ironically, the rise of software companies comes from the sharp drop in hardware costs and the standardization and modularization of hardware technology.

Hardware companies will become their own gravediggers if they can't promote their own software standards through hardware.

The most fundamental driving force for the decline of hardware cost comes from Moore's law of the chip industry: the computing speed of the chip per unit cost doubles every two years. Moore's Law has been developed for fifty years since 1965.

Similar speed of technological progress is also reflected in the development of memory capacity and Internet bandwidth.

In 2000, when Anderson ran the first cloud service company, Loudcloud, the cost for corporate customers to run a basic Internet application was150,000 USD per month. By 2065,438+065,438+0, the same application on Amazon's cloud service only needs 65,438+0,500 dollars a month. According to some analysts' statistics, the price of Amazon cloud services has been lowered for more than 40 times in the past six years, and it is priced at the cost per gigabyte of RAM, with an average annual price reduction of more than 15%.

At the beginning of this century, there were only about 50 million people accessing the Internet through broadband. In 20 14 years, this figure is estimated to exceed 2.3 billion. By 2020, it is estimated that the number of people accessing the Internet through smartphones will exceed 5 billion.

At the beginning, the operating costs of startups have dropped sharply, and the products developed by a few people can quickly reach billions of potential customers through the mobile Internet. The original hardware bottleneck that restricts economic development is no longer the main contradiction, and the core value is created by brand-new software applications.

Anderson gave an example in his article. Borders, an American entity bookstore, resold its online business to Amazon on 200 1. The main logic at that time was that the income from selling books online was too small and unimportant. Ten years later, Borders declared bankruptcy and more than 200 physical bookstores were forced to close. Amazon has long been the largest bookstore in the world, and most books can be instantly transmitted to readers' mobile phones through its Kindle software.

The largest video store in the United States used to be Blockbuster, which declared bankruptcy on 20 10. Today, Netflix, the largest video store in America, is essentially a software company.

As a software company, Google is essentially the largest advertising company in the world. Its rise has accelerated the decline of traditional paper media.

As a software company, Uber has greatly impacted the traditional taxi industry.

As a software company, Airbnb poses a strong threat to the traditional hotel business.

This is the prelude of software devouring the world, but the drama has just begun.

(4)

A typical question to a hardware engineer is: How can your software run without hardware? If the skin does not exist, how can the hair be attached?

My answer is: no butchers, no pigs. The standardization and modularization of external interface of hardware technology increase its substitution options. Coupled with the influence of Moore's law, its price keeps falling.

Although skin is important, if there are many skins instead of hair, the value of skin is not so high.

Although it is hard to make hardware, and the technical content is sometimes higher than that of application software, it does not mean that it has a high position in the value chain. In the initial stage of new product development, hardware is often the bottleneck of technology and has the highest value, but with the progress of technology, it is inevitable that software will go to the top of the value chain.

The syllogism of software devouring the world is:

First, software devours hardware.

Second, the application layer software devours the modular and standardized underlying software.

Third, and most wonderfully, the virtual world that crosses the physical boundary will devour the physical world and create unprecedented new value. The infinite possibilities will go far beyond the simple dispute between software and hardware.

Those who don't have a deep understanding of the development of this trend and still stick to the value of "material objects are wealth" may face huge cultural shocks in the next few decades.

6. Brain-computer interface

One of the possible schemes of brain-computer interface (DJ seo from neuralink): neural dust. Thousands of silicon-based sensors with the size of 10 to 100 micron are directly sprinkled into the cerebral cortex, and a 3 mm ultrasonic transceiver is installed outside the cortex as a relay station, and a transceiver is installed outside the skull.

It should be that software swallowed up the world, and many things in the physical world became function calls that could be abstracted by software. //@ Optimistic Programmer: With the development of this technology, programmers can control everyone and the whole world. ...

7、

Seth Godin:

"Industrial society is a zero-sum game. Every output will produce a return, and the return will be obtained by either management or workers. Scarce resources must be allocated, and the conflict between the two sides is structural.

In the interconnected economy, connections generate surpluses. There are many choices, and things that were scarce before suddenly become rich.

The challenge comes from readjusting to a rich world. Specifically, first think about how to contribute to the network (add new connections), and then think about how to get it. If you contribute enough, you will reap more naturally. "

"Power center, is rapidly shifting. From people who make things (no longer scarce) to people who create art and make new connections. The industrial economy will not disappear, but the right to speak will come from those who build connections instead of making parts. " This can be seen as another way of saying that software devours the world. Software programs are essentially about establishing relationships. Those who underestimate the connectivity of virtual economy will eventually be abandoned by economic laws.

8. The old ticket can't get on the new passenger ship.

1/ People have a huge habit tendency, that is, they use the abstract thinking mode solidified by the brain to judge standards and understand all new things.

2/ When digital cameras first came out, many people would say that the quality of digital photos is not as clear and beautiful as the photos developed by film, and it is more troublesome to save them on PC, which is not optimistic, and so on.

3/ The people who said these ridiculous things are either gone, forgotten by themselves, or embarrassed to admit it.

4/ The real turning point comes from the appearance of iphone, which turns photo management into a software application, which can be shared with many people in real time, and the gameplay is different.

5/ This can be seen as software devouring photography. This is unexpected for people who don't like digital cameras.

6/ In other words, the software they understand is still low-dimensional software such as photoshop on a single PC, rather than a brand-new software application that can be enjoyed instantly on a large scale. Although they are all called software, they are not the same thing.

7/ Large-scale enjoyment of * * * has added many new dimensions, which can instantly call other software on other people's mobile phones, thus giving birth to applications that the inventors never dreamed of.

8/ One of the essences of software sweeping the world is that some standardized application programming interface APIs have appeared in the market. When the number of participants carried by this interface exceeds a critical point, the efficiency and complexity of this software system will quickly surpass the old system, and this advantage will increase rapidly. Sharing dozens of photos in your album face to face with a few friends, and sharing hundreds of photos with hundreds of millions of people on social media, these two experiences are completely different.

9/ Large-scale software application is a short process. According to the old abstract model, people under the old system have been stuck in the observation dimension of "digital camera has low pixels and low photo quality" for a long time, so that when new dimensions appear, they completely turn a blind eye. In their world, great discontinuous changes have taken place in the surrounding environment. By the time my work was smashed, it was too late to react.

10/ When many people are still struggling with the tram/car argument, they don't realize that the overall situation of the game has already been decided. The following is the era when software devours automatic cars.

1 1/ According to this idea, one development of software devouring automatic cars may be a large number of automatic cars. On the one hand, it can connect with the Internet and enjoy various data such as road conditions in real time, on the other hand, it can directly connect with a large number of mobile merchants on board, and then reduce the physical distance between buyers and sellers to near zero in the shortest time through self-driving technology, thus realizing the transaction.

12/ Naturally, there will be a standard API with the largest market share, which is controlled by a certain car dealer. Other car dealers will make their in-vehicle software interfaces fully compatible with this API in order to share a piece of cake. Then, all kinds of complex software applications created by third-party developers will emerge in this API, which can effectively realize the enjoyment of various resources and form a complex and rich new ecology that we can't imagine.

13/ In this development process, all kinds of car accidents or failed attempts will be taken as evidence that opponents from the old abstract model are not optimistic.

14/ Similar logic As you can imagine, software devours the global financial industry. Here, we often hear many people say that "the number of transactions supported by systems such as Visa/Master far exceeds that of a blockchain system".

15/ Similar logic can also imagine multiple human brains/computer servers networking, high-bandwidth collaboration, forming a new and efficient life, and so on.

16/ and if we take history as a mirror, most people can't understand this evolution after introducing a new dimension, and will only focus on the shortcomings of new things in one dimension to support their wrong conclusions. When the offensive and defensive changes, the overall situation has been set, and there is no time and ability to avoid disasters.

When a new thing has been reported dead by the media for dozens of times, but it is still alive a few months later, there must be details behind it that you don't understand.

This strength of "strong things make you old" should be regarded as a kind of organizational optimization.

9. The old thinking mode can't understand the new paradigm.

1/ The long-term performance of most fund managers (over 97%) (over 5- 10 years, excluding management fees) lags behind index funds (here refers to the Standard & Poor's Index) for the following reasons:

2/ If one of their strategies outperforms index funds in the past, their confidence in the logic behind this strategy will be enhanced.

3/ They have a simplified thinking model of their past success, but the actual logic is far more complicated than this. There are various assumptions and boundary conditions that are difficult to observe behind the actual logic, and these assumptions and boundary conditions may change.

4/ Short-term strategic success will inevitably attract imitators. At the beginning of the influx of imitators, they will give more positive feedback to successful strategies and perform better, thus strengthening investors' beliefs.

5/ The influx of too many imitators makes the effect of the strategy worse, and it is necessary to increase leverage to maintain the original return.

6/ After a certain critical point, the assumptions and boundary conditions supporting the original logic have changed, and the original strategy has completely failed, even because a large number of speculators quickly closed their positions, resulting in huge losses.

7/ Faced with this critical point, successful people with strong initial beliefs are often slow to respond. Because its brain forms fully reinforced logic and has huge confirmation bias, it will ignore any evidence that contradicts its logic for a long time. This is the first key point that fund managers lag behind passive index funds.

With the development of society, brand-new large companies/investment strategies will emerge constantly to attract the influx of capital. The rise of new companies often confuses the elderly because their business models/business logic are different. The emerging new successful companies often have some important features that are not in the old man's thinking mode, so even if they stand in front of him, they are completely ignored.

In the 9/ 80' s, the market underestimated Coca-Cola because it didn't realize its expansion potential in the international market. Similarly, everyone lacks imagination about Wal-Mart and Starbucks, which took 20 years. There is also a lack of understanding of Amazon's logic of surpassing IBM and Wal-Mart in the past five years. Similarly, they will also lack understanding of new companies and organizations that will surpass Amazon in the future.

10/ missed the express train of the new paradigm new company, which is a problem; But if you are arrogant enough to short new large-scale growth companies with limited information and logic, this may be fatal. This is the second key point that fund managers are far behind passive index funds.

1 1/ Will is not equal to the result. No individual's understanding of the outside world is comprehensive and completely correct. The evolution of complex systems cannot be explained by mechanically simple causal logic. The historical experience of the market shows that the dislocation between individual wishes and results is inevitable. Without some simple and rude structural advantages, it is basically a waste of time for ordinary investment managers to outperform the market index for a long time.

12/ the biggest advantage of passive funds is that the error correction mechanism is objective/automatic/unaffected by any emotions.

13/ active investment If you want to surpass index funds such as SP500 for a long time, what you need is: 1/ Expand the space for investment choices, not just US stocks; 2. Introduce an error correction mechanism that is more objective/closer to the essence of business; 3/ Increase other external structural advantages (such as using one's own goodwill to obtain transactions that ordinary people can't get).

It's complicated You can't assume you have all the information. Over-optimization is the root of all evil:)/@ Lurking in Europe: Why buy passive funds? When software devours the world, don't companies that buy the top five or 10 with the largest market value of US stocks earn more? And passive funds account for more and more.

A lot of blindness in the world belongs to Buffett's "self-neutrality":) Buffett: "A group of smart people participate in the management of hedge funds. But to a large extent, their efforts are self-neutralizing, and their IQ cannot overcome the costs they impose on investors. "

10, the three elements of life.

1/ Three basic elements of life: First, there must be a strong energy source; Second, there should be an entity form that can store reservation information; Third, to have high liquidity, information exchange/combination/calculation can be realized.

These are necessary conditions, but not sufficient conditions.

3/ Except for the Earth, other planets in the solar system are either gaseous and unable to store information, or a hard piece does not exist in circulation. Only one or two satellites of Jupiter, Saturn and Uranus barely meet these three conditions.

4/ Compared with personal development, firstly, there should be more people and more economically developed places to develop. Second, you should be able to record your work and store it for future use. It is difficult to have the effect of record storage by working for people and doing some transactional things. Money can be regarded as a form of record storage, but if it is spent soon, it cannot be stored. Writing, artistic creation and product brand building can all be regarded as the work of memory storage.

5/ With storage, it is necessary to cycle and seek opportunities to combine with other resources/create new value. Therefore, it is also very important to continuously spread through various channels and networks.

6/ The difference between a person/company/organization that can achieve the three points of "energy/storage/circulation" and a person/company/organization that does not deliberately achieve these three points is similar to the difference between organic matter and inorganic matter.

7/ It can be seen that the development history of the world is a development history with higher energy intake efficiency, higher storage efficiency, larger capacity, faster and more information circulation and more complicated life forms.

9/ All professionals should think about creating their own products and works, which can be preserved for a long time, repeatedly quoted and widely circulated, so as to truly realize personal organic growth. Otherwise, it is a painful/low-level existence to constantly sell your time for money to make a living. Sometimes money is not the best way to store information, and it is even worse if you are cheated into borrowing money and unable to repay it.

Circulation and calculation seem to be essentially the same thing. As soon as things circulate, various permutations and combinations will naturally appear. The essence of calculation is to arrange and combine different things (inputs) in different ways. The research of algorithm is not only to improve circulation efficiency. The so-called software devours the world, that is, "the most efficient computing power will dominate the world."