Why Are All These Happening Now?
Why is this exponential transformative situation going on at this point in time? What are the related threads across all of the above?
Consumer behavior is changing. What’s driving change right now at a particularly rapid pace is that consumers today are able to transfer their experience context from one area to another. What if my bank looked like Uber? Or Airbnb? The context transference idea is relatively new. People are moving across category at an alarming rate. What’s the economic moat for a bank, as Warren Buffett famously coined? Is trust the biggest driver? I’d argue it’s moving from trust to convenience, which is even more important. If Venmo is allowing me to make payments, I might keep my savings account in my bank because that’s my comfort level, but for all my transactional interactions I will use Venmo. Banks used to get all their money from the transactions. No bank wants to just be the safety deposit box for customers.
Similarly, no hotel wants to be just a clean place for a shower and a bed. That wouldn’t bring about the billions of dollars in value that exists in a brand like Marriott. There’s a convenience architecture. When I stayed in hotels on a recent trip, I didn’t order room service. I ordered Uber Eats. Some hotels don’t offer room service anymore, and they no longer need to run a kitchen. I can also just watch movies on Netflix on my iPad. So if you’re a hotel, what are you besides a clean bed and a shower?
Second, business models are able to be funded, given the search for growth. We have a surplus of liquidity in the market. There’s a lot of dumb money in addition to smart money trying to find a home. Look at the macroeconomics – the only thing delivering returns are investments in equities, newer businesses. In the rally in the Nasdaq and the Dow over the last 10 years since the financial crisis, the top five or six companies are all tech companies. They are businesses enabling new business models. That’s a phenomenon. Growth comes by enabling different ways to think about the business. If you say, this is what it takes to create value, the market starts to move there.
Lastly, as described earlier, the computing power and technological ability to create and deliver on expectations is evolving rapidly. Even in something as prosaic as the automotive space, where the car is becoming about software. Not hardware. You can download a new car.
These three factors are in turn enabling the platform companies, and they’re powered by technology like voice, and they’re enabled by connectivity like 5G. They all come at the same time. Together, they are making the exponential difference.