
When Tailwinds Vanish - sethbannon
https://luttig.substack.com/p/when-tailwinds-vanish
======
dwelch2344
Interesting read. Not sure I agree, though not my area expertise.

The idea that we’re hitting full saturation, or that startups will have to
push into market vs pulling sales from market gaps assumes that we’re reaching
full saturation across the board. That the reach of everyone being online also
means they’re all online in the same markets / products / verticals.

I’ve worked most my career consulting as a software engineer, primarily split
in 4-5 business verticals. The giants in those spaces (hiring, healthcare,
cosmetics, etc) have 8-15% market share. And there’s constantly turn over
where people for whatever reason exit and return to the customer pool.

So while from an economic and academic standpoint this seems pretty solid, I
have a hard time accepting it practically.

Again, anything I know about this kind of thing is peripheral knowledge, so
very likely wrong. would love some insight :)

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autokad
Interesting article, but I disagree with the author on a lot of points.

it largely revolves around: "But people can’t spend more than 100% of their
time or money on the Internet."

first off, although the internet is baked into everything, its not just about
the internet. self driving cars, 3d printing, fake meats, and lots of other
things I can't imagine.

2ndly, while you can't always take more time/money from a person, you can
always add more people. there are something like 2 billion people living on 2$
a day. Its not inconceivable that the market/economy today is .1% of what it
will be in 30 years.

even before covid19, businesses that were not taking advantage of the internet
and tech was dying such as Macys... Businesses that dont invest like crazy
into tech and R&D will go extinct.

I dont think the internet is maturing, its just getting started.

also: "The Silicon Valley of tomorrow will not look like that of today"

The SV of 1999 looked not much like 2004, which looked not much like 2009,
which looked not much like 2014, which looks very different from 2020. Its not
stating much, everyone knows that. It also furthers the point, there is a lot
of growth in the future.

~~~
ChuckMcM
Was about to say the same, in particular this:

> also: "The Silicon Valley of tomorrow will not look like that of today"

I came to live in Silicon Valley in the 80's. At the time, the technical press
was bemoaning that the glory days were gone, making chips had become a race to
the bottom, engineers were being laid off, and there wouldn't be enough jobs
for the people who were already in the valley, much less the people in school
who would graduate in 1 to 5 years with engineering degrees.

It bummed me out because I was at Intel, which seemed like a good company when
I joined them out of school, but they were laying off people and it was
"clear" that the semiconductor houses were going to consolidate down to
nothing.

At the time I took a "big risk" and left an established company and joined a
startup that seemed to be doing okay. At least they weren't losing money. It
was called Sun Microsystems, they had just gone public (the Friday before I
joined), and were less than 2,000 people. They were building these things
called "Workstations" which everyone figured would fail because as soon as the
"Big" companies (HP, IBM, and DEC) decided to get serious about this space it
would squash them like a bug. They were doing some crazy things, like telling
you all of their APIs and letting anyone copy them. They were using computer
chips they bought from Motorola and running a University's version of the UNIX
operating system on them. Their marketing message was simple, "We're open, we
may not be here next month but don't worry because everyone has the
information they need to make compatible stuff for our systems so even if
we're dead, you can still use our gear."

It was a very different message than what the "big boys" were saying.

10 years later they were the "gorilla" and DEC, HP, and IBM were having a hard
time keeping up. Then the Internet caught on an suddenly they were in a
maelstrom of innovation and change and couldn't change with it. Ex-sun folks
like to joke they became the dot "." in Oracle.com.

When the dot com crash hit I was older and had gone through the semi-conductor
crash so I wasn't sure that this was "the end" as everyone was predicting.
There would never be another VC who would be willing to risk giving you money.
There would never be another retail investor that would buy and IPO for a
company that wasn't making money. There was no "moat" or anyway to protect
your market share so the only companies that would survive would be the
distilled and conglomerated husks of the old dot com dinosaurs.

Then Google and Facebook exploded.

So what does it all mean?

It means that if this is the first time you've seen the phoenix burst into
flames you will just _know_ that its dead and there isn't any left to do but
sweep up the ashes. But if this is your second, or third, or fourth, trip
around the block you know that the last trip found a match between value and
technologies ability to deliver it with enough margin to support building a
company. And you know that people are going to spend what they earn and there
will be new things to do and new ways to spend. If you can see the things that
made gave the market wings over the last 10 years, often there are hints about
the next thing that will generate the excitement.

And if you can't, that is okay because the person that can? They are going to
need talented engineers to help them bring it to market and make it work.
There is something magical about taking $0.02 cents of electricity and turning
it into something someone will buy for $1. People that can internalize the
value of information will understand how to capture value while building new
products. And that in turn will fund an entirely new ecosystem of businesses,
large and small.

There is nothing more creative, and innovative, than a group of engineering
friends with too much time on their hands.

~~~
lioeters
Thank you for sharing your experience, that was insightful.

The long view of history, rising and falling waves of innovation, funding,
market demands, new ideas and shifts in technology.. After each winter, a new
cycle begins with a search for:

> a match between value and [technology's] ability to deliver it with enough
> margin to support building a company

Which sounds like "product-market fit".

That makes me think, what may seem like a downturn in the industry or
saturation in a market segment, could be a sign that fresh pastures are
needed, with new opportunities for those who can see where things will go, the
next big ideas (which often start small and look like a toy to the
established/entrenched players).

> If you can see the things that gave the market wings over the last 10 years,
> often there are hints about the next thing that will generate the
> excitement.

This is what I love about the world of computers and technology. The people
who inhabit it, who push it forward, are driven by imagination and a kind of
undying hope, to see the blue skies beyond the weather of today.

------
mrtksn
There was not that much tailwinds in the rest of anyway, SV will probably
become more like London or Berlin.

What is more interesting to me is that the Internet is no longer magical. It’s
not more fun that the electricity and everything revolves around few apps and
services that produce the same content over and over again. Tiktok is the only
new big thing in years and it’s not from SV.

The interesting things happen in the finance and news media. Right now these
suck and innovations are happening there. There’s many things that suck too
but nothing interesting is happening on most of these.

In other words, the internet as we know it is about finding and connecting
what’s out there and that’s almost complete. The internet of tomorrow is about
making sense of what is out there and restructuring it.

I think there’s a lot of green fields for tech just around the corner. But
unlike the previous boom that one will be heavily connected with politics.
It’s probably going to be just as destructive but less constructive and less
fun.

------
nopinsight
One underlying assumption behind the article: information technology stands
still.

The big boys and behemoths of current and past eras emerged when there was a
major change in technology or adoption. The two are also interdependent. New
technologies drive new use cases and adoption in new segments, which drive
further technological inventions.

Ubiquitous wireless devices, new AI capabilities, and wearable sensors are
some areas that provide opportunities for startups today. Many more are still
to come in the next few years and decades.

~~~
nopinsight
Some technologies I keep an eye on: Adaptive Robotics for everyday tasks,
Autonomous Vehicles, Brain-Computer Interface (BCI), Quantum Computing

They are still far from practical, but hold great long-term possibilities.

Feel free to add some that interest you.

~~~
ehnto
Distributed on-demand manufacturing is something I am following. With
different types of what you might consider "No Tooling Change" manufacturing
methods getting better and better, we might see the economic viability of
manufacturing on demand in local manufacturing centers. These depots could
make items asked of them on the spot with no upfront re-tooling costs or bulk
orders needed. This could enable small businesses to have novel ideas that can
easily scale across these near instantly available manufacturing nodes,
avoiding hefty tooling and bulk buy costs, and also avoiding having to ship
things across the globe.

Imagine you order SomeDeviceX from coolthings.com, they send the order sheet
to the town's local fulfillment center in a standardized format they accept.
The fulfillment center sends the files out to it's manufacturing devices,
think CNC, 3D printers, laser cutters and PCB laser etchers. Some time later
the device is assembled, ready to ship out to the neighbourhood.

What I like about the idea is that some items are valuable to only some
people, so could never achieve economies of scale that make them viable to a
business, and never be manufactured cheap enough locally to meet the market at
the right price point.

The only kind of manufacturing being done in many places is large scale plants
for things outside of the community, and everyone relies on products shipped
in from around the globe. There is a gap missing, between expensive boutique
items and mass produced cheap items, where affordable locally produced items
could exist if manufacturing could be cheaper.

------
lmeyerov
As a heavy R&D type, I enjoy these trends, though suspect it's predicated on a
big and historically wrong IF: no new compute platform.

mainframe -> pc -> laptop -> phone -> cloud/gpu/ai -> blockchain/vr/... ->
quantum/self-driving-car/... .

Each of those bring massive high-margin software tides to ride.

In practice, life's still pretty sweet for cloud/gpu/ai startups, so we still
seem to be roughly at that point. (We do a lot of gpu cloud accelerated
security/fraud visual graph analytics: most enterprises still do it on-prem
and basically just hope splunk can run regex without dying.) In GPU land, it's
pretty clear they're being way underutilized, esp. due to slow SW rollout by
various incumbents like cloud vendors.

We're still early on the transition to the next phase. The
blockchain/vr/quantum startups raised a ton of funding, but have largely
fallen flat. Some of the fundamentals in them seem sound, so they seem more of
a matter of being early, not necessarily wrong. Current teams just couldn't
get the tech together, or a true killer app: those are a question of time.
Likewise, we know quantum etc. are coming, just need ~5 more years for what
most general sw people start to get into.

IMO bigger risk is monopolies. Maybe the market reasoning is more from VC
perspective, where everything feels 'expensive', and SaaS metrics era made
investors forget how to take tech risks while the coming gen of platforms
emerge.

EDIT: Some other potential near-term up-and-comers - synthetic bio
(crispr,..), NN moving into program synthesis (so past perception and into
automation), serverless. I don't follow agtech, but drones/robots/etc. are
increasingly here.

~~~
Animats
Except that VR and "blockchain" were duds.

Self-driving cars ought to be big, though. Sooner or later, someone will get
it right.

The Next Big Thing is probably wind and solar + batteries. Bye bye, gasoline
industry. In twenty years, you may need to plan out a route in advance to be
sure of finding an open gasoline station. Heating oil will last longer.

~~~
mirimir
> Except that VR and "blockchain" were duds.

Based on limited experience, albeit going back about 30 years, VR won't become
popular before visual and proprioceptive inputs can be synched. And I doubt
that'll be practical before direct brain input works well.

About blockchain, it'll succeed once users don't know that it's there. I mean,
how many understand how HTTPS certificates work?

~~~
rsynnott
I mean, I think the key difference is that HTTPS certs are actually useful.

~~~
mirimir
Orchid creates multi-hop VPN connections using servers from multiple
providers. It uses a private blockchain cryptocurrency to ~anonymously
distribute value from users to VPN providers. That's useful because users
don't need to trust any single VPN service.

Loki is an onion network. Currently the Session messaging app is the only
service implemented, but I gather that there will be others. Loki uses a
private blockchain cryptocurrency to hinder Sibyl attacks. That's useful
because users will less likely get pwned by malicious nodes.

If those work out, there's no reason why most users would need to even know
that blockchain cryptocurrencies were involved.

------
zuhayeer
Found some of the points in this article to be contradictory. Author argues
that carefully measured growth will win in the years to come, but also
suggests that companies need to go all in on SG&A since having more staff
means more growth.

Personally, I agree with the carefully measured growth part, but I also think
small teams still have a lot of power. Investing in SG&A still isn't going to
be as fruitful as R&D. The Internet hasn't halted yet – there's still a lot
more to uncover. The physical world gives us a perception that everything is
finite – that everyone's fighting over the same resources. A zero sum mindset
(which would certainly make the case for more capital spend on SG&A). But in
the virtual world of the Internet, the universe is ever-expanding and new ways
of doing things are being discovered at every corner.

------
9nGQluzmnq3M
This is an incredibly blinkered view. Even if you think the US is saturated,
which I doubt, there's a literal entire world out of there, many parts of
which are still taking their first baby steps onto the Internet. Places like
Indonesia and Vietnam are growing their "internet economy" (money spent
online) at 50+% CAGR, and COVID is _accelerating_ many (not all) companies in
spaces like e-commerce or online collaboration.

[https://www.temasek.com.sg/en/news-and-
views/stories/future/...](https://www.temasek.com.sg/en/news-and-
views/stories/future/Southeast-Asia-accelerating-internet-economy)

~~~
0xfaded
The question then becomes is SV the best place for technology to be built for
India/Malaysia/Vietnam or others. My guess is that the answer is no, and after
the success of China we'll see protectionist policies that ensure that the
answer is no. A lot of the power of US companies comes from US branding, which
I think still holds at the individual consumer level. But at the country
policy level, is the US still the gold standard that developing economies
should aspire too? It was pretty clear to people living in the west that
cracks have been forming for a long time, but the COVID situation has enough
propaganda potential paint various government structures in a different light.

------
aurbano
Aside from the other great points that have been made already in other top
comments, I have a little nitpick (or feedback for the author, if they're a
reader): charts should have axis labels, units, and ticks. Otherwise you might
as well not have them.

Take the second chart on the page for example, as soon as I saw it a little
warning light turned on in my mind. That chart says incremental spend (y axis)
vs time (x axis), but no values or ticks on either axis. A chart like this
could literally mean _anything_ because you have no idea of the rate at which
those lines are getting smaller. You have no idea how much more revenue to
startups there is compared to incumbents, the difference that _looks_ big in
the chart could even be 0.001%, just "zoomed in".

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Nasrudith
That article seems to have some /very/ bad advice shifting away from R&D. Did
they not remember what happened to everybody else who did that? Eventually
overtaken when they got comlacent. They all thought themselves the controller
of matured markets or the emerging ones as a completely separate domain. They
thought wrong.

There is no guarantee that R&D will get thr same raw returns or even stay on
top of the market but neglecting it from trying to not cannibalize their own
markershare has proven a fatal mistake to companies.

Even being an "also ran" is better than getting your lunch eaten when the next
new thing comes along.

------
codesections
Looking at this from a FOSS perspective, some of the "negatives" this article
discusses strike me as significant reasons for optimism.

Collaborative, community-driven, open source projects sometimes struggle to be
as innovative as startup executing a singular vision – but FOSS projects
_excel_ at providing compelling alternatives to existing, entrenched
platforms. If the pace of new "breakthrough innovations" slows a bit, it could
provide FOSS exactly the opportunity it needs to catch up on features before
users move on to a new paradigm.

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DeathArrow
I think there's room for growth.

There's still a big part of the growing world population who doesn't have
internet access.

Internet connects not only people but also devices.

However, the growth of online businesses will mean shrinking elsewhere which I
am not sure it is good. Amazon and the like will replace brick and mortar
stores, Netflix will replace TV, food ordering will replace restaurants and so
on.

There will be less time spent outside, less social interaction and the jobs
created in IT industry might be less than the jobs lost elsewhere.

------
janniks
Am I the only one confused that this might be about the CSS framework?

~~~
Kye
I've never heard of it. The meaning of the title was clear to me. The title
wouldn't even make sense without modification if it was about a CSS framework.

