In his essay, Fred Wilson wrote in AVC blog about technical innovation, business model innovation, and the last two big waves we had in the tech industry:
A good example of this was moving from web apps to mobile apps, which was largely a technical innovation. While the move to mobile certainly created some new companies, it largely strengthened the market position of the big Internet companies because there was little to no business model innovation.Compare that to the move from desktop computing to the web. We saw massive disruption as we went from a licensed software business model to an advertising supported business model, which has evolved into an advertising/subscription freemium business model.I am excited about the move to crypto based business models supporting decentralized apps for this very reason. I think it opens up the possibility that some very large new companies will be created that innovate largely on entirely new business models.
That's very true. It's exciting to see how crypto & decentralized computing evolve. We are standing in front of a solution for multiple problems, and we have only discovered the technical side of it. But we don't see - yet - a similar successful business model that can accelerate the technology and make it accessible to the public.
It's a relatively small chance to have technical innovation plus business models innovation by one person or one company. But when it happens, the results are remarkable.
iPhone continues to be the most profitable item in the history of business, commanding Ferrari-like margins with the production volumes of Toyota. - Scott Galloway
I'm not sure how accurate the statement is considering Apple iPhone margins compared to other software products in other companies. In the end, Google search is also a product. And Facebook social network is a product.
But still, it's exciting to consider the meaning and potential we can get when we have both technical and business model innovations in one product. iPhone together with the Apple App Store ecosystem is a platform that accelerated the technology and cleared the path for many companies to build on top of it, or for others to copy and improve in other directions.
Cryptocurrencies
Cryptocurrencies like Bitcoin or Libra are the most visible and brave models on decentralized computing. The idea of money being programmable is very inspiring for the tech industry, although it seems a hard task to convince governments to accept it. As you may imagine, governments and banks who had the power to control money for centuries will not leave it for tech cool kids that easy.
The response was super quick in the US to Facebook backed cryptocurrency Libra. started with Donald Trump's tweet:
“Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity. Similarly, Facebook Libra’s ‘virtual currency’ will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International.”
Facebook tried to introduce solutions for the expected problems. But nevertheless, it wasn't too long until they found themselves in court trying to defend their cryptocurrency. That was quickly followed by a regulatory roadblock in Europe.
I can understand that the idea of cryptocurrency and digital tokens could be challenging for people outside the blockchain space. But was this aggressive response because of Facebook and real concerns of security, or because governments and banks fear losing control in such a power area? I think it's the latter. But anyway, this will become more obvious when more ideas and experiments come to the ground.
Cryptocurrencies are still the most visible business model for decentralized computing, but it's not the only one.
Platforms
During the Gold Rush, most would-be miners lost money, but people who sold them picks, shovels, tents and blue-jeans made a nice profit. - Peter Lynch
Other companies are trying a different business model. They are trying to sell the shovels for people or companies who want to build their decentralized applications. Companies like Ethereum, NEO, and EOS are all competing to become the infrastructure level for decentralized applications. Think about them like AWS of blockchain. The platform idea is usually promising for the future of technology. Besides that, it can clear the path for other products to build on top of it. And it seems to me that big companies like Amazon, Microsoft, and Google are also trying not to miss the train by applying their competing platform solutions "Blockchain as a service" based on their existing cloud platforms.
Decentralized social media
Jack Dorcey, The CEO of Twitter, wrote a thread in December that went viral, announcing "BlueSky" - clever name! - a decentralized standard for social media. And Twitter ultimately will be a client for this standard.
And later on the thread.
That was a bold announcement! Especially when you put this together with the fact that investors in the financial society were pushing hard Twitter leadership for many years to think more about better ways to monetizing the social network in comparison with Facebook.
But still, it's not clear how the final product will look like, or how the new protocol will work between Twitter - the consumer - and other competitors.
The future?
It seems to me that platforms - as usual - will be the apparent winners in the future. This direction is relatively easier than cryptocurrencies, for example.
But there is room for multiple answers to this question. It's a question for imagination. And I'm looking forward to seeing how it will evolve.