Bill Gates Noticed a Economy Trend No One Is Paying Attention To(observer.com)
observer.com
Bill Gates Noticed a Economy Trend No One Is Paying Attention To
http://observer.com/2018/08/bill-gates-global-economy-trend-epiphany/
8 comments
I don’t really buy this. I haven’t bought it since the dotcom boom. I’m pretty sure Bill didn’t really buy this when he was CEO. If he did, then the people he had in charge of ops didn’t.
In those days vertical scaling was a typical solution to the problem of too many users. But the cost of exotic hardware goes up with power, so the cost of a new batch of users is higher than the cost of previous batches. Even if you managed horizontal scalability you ended up paying a kings ransom for networking hardware to link them all together. And then there’s the databases.
These supposed economies of scale never really materialize. We spend a significant fraction of our development budget on improving performance and availability, learning or creating more sophisticated tools. None of that is necessary once your project stagnates, which is why maintenance software is attractive to enterprises.
These days we can get away with a lot more horizontal scalability, but most of our algorithms scale logarithmically. Many are nlogn, we strive for mlogm (where m is active users) but get stuck with mlogn often. But if you are dependent on ad revenue you want to increase m so you get paid, so the distinction matters less than it used to.
Each customer costs at least logarithmically more than the last. That means your operating costs double when you sell 4 times as many copies. That’s not nearly as expensive as running Tesla, but it’s not zero. If you’re in charge of those strategy decisions and you aren’t aware of this, then you probably won’t have that job for long.
In those days vertical scaling was a typical solution to the problem of too many users. But the cost of exotic hardware goes up with power, so the cost of a new batch of users is higher than the cost of previous batches. Even if you managed horizontal scalability you ended up paying a kings ransom for networking hardware to link them all together. And then there’s the databases.
These supposed economies of scale never really materialize. We spend a significant fraction of our development budget on improving performance and availability, learning or creating more sophisticated tools. None of that is necessary once your project stagnates, which is why maintenance software is attractive to enterprises.
These days we can get away with a lot more horizontal scalability, but most of our algorithms scale logarithmically. Many are nlogn, we strive for mlogm (where m is active users) but get stuck with mlogn often. But if you are dependent on ad revenue you want to increase m so you get paid, so the distinction matters less than it used to.
Each customer costs at least logarithmically more than the last. That means your operating costs double when you sell 4 times as many copies. That’s not nearly as expensive as running Tesla, but it’s not zero. If you’re in charge of those strategy decisions and you aren’t aware of this, then you probably won’t have that job for long.
You wouldn't download an update would you?
All artifacts that are high technology become worthless within 20 years. If you had invested 100,000 dollars into a video editing suite in 1994 the whole thing would be worthless in 2004. Anyone wanna buy a 60K Sony BVW? Got one for 50 bucks on ebay shipping not included. EDIT Oops that was a a UVW not a BVW deck still can't see why you would want to record anything. Just get the tapes into the computer.
If you made $500,000 with the video editing suite in those 10 years, it was probably worth it.
500,000 - 100,000 / 10 = 40,000
But that doesn’t include salaries for professionals like editors or paintbox artists. A lot of video companies in central Ohio could not cope and went out of business at least temporarily. Mills James made it because they were poised for maximum profitability instead of just economy.
Now if you just mean 500k profits well then it very well may be worth it :D
But that doesn’t include salaries for professionals like editors or paintbox artists. A lot of video companies in central Ohio could not cope and went out of business at least temporarily. Mills James made it because they were poised for maximum profitability instead of just economy.
Now if you just mean 500k profits well then it very well may be worth it :D
From wikipedia: Vegas Pro 1.0: July 23, 1999, Adobe Premiere (became Adobe Premiere Pro): 1995, Final Cut Pro introduced at NAB 1999. I get your point but video editing software doesnt seem to be the best example. Social networks on the other hand...
Certainly software makers and all equipment makers had something to go on but assets value just disolved too fast for some to cope. An early version of vegas may have cost about 400 new but would not be worth much today. I recently got the humble bundle deal for 50 dollars.
Does this suggest that leasing software or SaaS is the way to go?
back in the 90s some costs could not be made cheaper without advancing technology in computers and at the time it happened slow enough for people to not realize what the end outcome would be and fast enough to be ruinous for people that didn’t rent their gear. I think that in the video business it is best to rent if you work with high end production. And it is better to be more like a general contractor than a manager who hires contract laborers instead of trying to run a payroll.
Ben Thompson of Stratechery has written about this a lot. Software has a small marginal cost and that's why Facebook can have over 2 billion users MAU, I can't think of anything in the world except food and water that has over 2 billion monthly users. Even the largest non-software company could only dream of that kind of reach.
Apple family of products: Macs, iPhones, iPads, iPods, etc.
Android smart phones.
Nokia / Samsung feature phones etc.
YKK( https://en.wikipedia.org/wiki/YKK) probably has billions of daily users.
Bosch as well: https://en.wikipedia.org/wiki/Robert_Bosch_GmbH
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Oil.
Colgate toothpaste. According to their wiki "Colgate is the only brand in the world purchased by more than half of all households".
Alcohol, cigarettes, drugs, prostitution, porn, movies and TV shows. Maybe gambling, depending on how it’s defined.
That’s not what Bill said:
“Not enough people are paying attention to this economic trend”
“Not enough people are paying attention to this economic trend”
Yeah, this article is a clickbait rewrite that adds nothing of value to Bill's original note. [0]
[0] https://www.gatesnotes.com/Books/Capitalism-Without-Capital
[0] https://www.gatesnotes.com/Books/Capitalism-Without-Capital
I feel like this policy of all HN Articles having to use the original article title is working at cross purposes. You can’t remove the clickbait from the title because that’s ‘editorializing’
As if we aren’t all reading the comments to see other people editorialize the articles...
As if we aren’t all reading the comments to see other people editorialize the articles...
This is econ 101, at least it was for me.
I'm not an economics major, so forgive the possibly 'not even wrong' question: but does anyone know if there is a term for the phenomenon that price, as represented in currency, is really a lagging indicator of total value to the market, as the market has yet to digest and sum over all of the intangible value of a given 'something' into a single agreed-upon numerical metric that can the used for trade?
How about EcMH - the "Eventually-consistent" Market Hypothesis
/s-orry Bogleheads, couldn't resist :D
/s-orry Bogleheads, couldn't resist :D
A word I don't see in the article or tweetstorm is commodity, which is the foundational unit of our economy. A commodity has the "old economy" property Gates is talking about where the 10th car costs the same to manufacture as the 1000th. A created thing where virtually all the expense is in the initial creation, after which duplication and distribution is virtually free, is no longer a commodity. As our entire economic system, and social system, is based in the end on the commodity as the base unit, this will have profound effects as time goes on.