

Electrons and Atoms - dude_abides
http://blog.samaltman.com/electrons-and-atoms

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npalli
It might be useful to look at the history of this bits vs atoms idea. During
internet 1.0 era, about 20 years back, the prevailing idea was the everything
was becoming bits and the winners will be those who will manage the bits
instead of being stuck on the atoms side of things. If I remember correctly,
the MIT guys (negroponte) and Marc andressen (ironically, who is quoted by
Sam) and others were huge into this idea. So, looks like we are coming to the
idea that it is bits and atoms. I would say take it further and it will be
atoms only. The bits side of get absorbed into the atoms side of things and
will no longer be a differentiator.

I'm sure the first pizza place that installed a phone or fax machine was
killing it with customers. But that didn't make them a communications company.
Soon, every pizza place got a phone and a fax machine and then it back to who
made the best pizza. I believe we are in the installing 'phone/fax' machine
phase of smartphones. After 10 years it will be not a differentiating factor
and the people who control the atoms side will win.

EDIT: There are companies that are digital by nature (information, music,
publishing etc.) so obviously this absorption of bits into atoms idea extends
to companies that have a large atoms side to them.

~~~
hershel
>> After 10 years it will be not a differentiating factor and the people who
control the atoms side will win.

If you look at amazon and ebay, they are doing great. And they started mostly
at the information side(but with time acquired better fitting atoms). On the
other hand many physical retailers are suffering.

~~~
npalli
It is interesting that you mention amazon. The Internet 1.0 version would be
amazon.com consisting of a bunch of programmers who would hook into the
digital infrastructure of manufacturers, logistics providers and customers.
Then by applying some fancy math they would be able to provide amazing value
to customers who would then shop exclusively at amazon.com. At that point
amazon would charge a ‘vig’ for every transaction on the Internet and become
very successful in the process.

Needless to say, that hasn’t panned out. Amazon has invested huge amounts of
capital in its physical infrastructure. Everyone thought they would kill best
buy. Best buy is making a resurgence (look at its latest report) and
anecdotally I see best buy having better prices than amazon. Internet company
price match is now common among many big box retailers (Best Buy, Fry’s,
etc.). Amazon is going to invest a huge amount $12 Billion in capital in the
coming months. Co-incidence?

So, long story short, it appears that many of the latest internet companies
are beginning to realize that you need a deep physical presence to make things
work (see Bonobos). You can’t just build a fancy website, run some machine
learning algorithms, do some A/B testing and conquer the world ☺. Look at it
this way, Uber has raised $350 Million. Will the digital component (website,
algos etc.) be more than 10% of that? I doubt it.

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danielpal
From my list of top startups:

Heres the ones that strongly supports it:

    
    
      1. Square: Easy payments for the real world.   
      2. AirBNB: Lodging on the real world.    
      3. Pinterest: What I like of the real world.    
      4. Twitter: Whats going on right now in the real world.  
      5. Palantir: Intelligence of the real world.    
      6. Uber: Transportation in the real world.
    

Startups against it:

    
    
      1. Dropbox: Storage for my digital life.  
      2. Evernote: Notes for my digital life.    
      3. Box:  Enterprise collaboration.    
      4. Splunk: Visualizations of digital things.    
      5. Cloudera: Hadoop for Enterprises.
    

Not sure if it's very strong - seems like they are equally distributed.

~~~
diminish
what about altmans facebook example? where do google, yahoo, heroku, github,
wordpress, engine yard, groupon, admob, tumblr, twitter, foursquare...fit?

~~~
sama
I specifically carved out enterprise software and developer tools--I think
this mostly applies to consumer Internet.

As mentioned, Google is a good counterexample. Groupon and Foursquare very
much touch the real world. I'd argue Yahoo made a mistake of not being enough
in touch with the real world. Tumblr and Twitter are also reasonable
counterexamples, although both were started before I think this trend became
very strong.

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MIT_Hacker
I find this post to be a little bit uninformative. Sam is making the argument
that the most successful companies are those that bridge the physical and
digital world and increase a human's efficiency to complete a task. The
startups that do best are those that focus on this.

This seems like a bit of a trivial statement in my mind. Is this not what most
startups are trying to do? Solving an inefficiency in the world.

Before the last five years, it has been difficult for PG's definition of
startups to focus on the physical world, because of our discomfort with
putting parts of our physical world online. Most successful startups up until
now have helped build up an infrastructure that has allowed new startups to
emerge that tackle physical problems.

I.E. Uber required Apple to develop the iPhone and a lot of startups rely on
Heroku and Parse as a service.

I really enjoy Sam's writing, and I was excited for a post dealing with the
advent of hardware startups with the success of 3D-printing. I didn't find
this post to be up to par with some of his other posts.

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dataisfun
I'd also observe that the initial companies that took on the purely digital
side of things (e.g., Second Life), might have just been too early in a world
not yet as digital as it is today. That is, people didn't have enough of a
digital life that a service aimed exclusively at it would be of sufficient
value. That could change as more of life becomes fully digital. So it's
possible that the online/physical thesis is "fighting the last war," so to
speak and future companies might not want to pursue that.

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amiune
I'm still trying to figure out something that cannot be linked to the real
world

~~~
andrewflnr
Fictional entertainment consumption?

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rory096
jdileo: Looks like your account's been dead (improperly, seems to me) for at
least 986 days.

~~~
jonmrodriguez
jdileo: I think you have to make a new account

