Tech Companies Without Computers
What if the predominant method of value creation computers have given us has not been in the form of operational efficiency or newly afforded communication models? Instead, what if it is the ability to economically test business models?
Imagine for a moment that computers, and the internet ecosystem more broadly, did not exist. Could any of the big tech success stories that we know today exist in this world, at any scale? By definition the answer would seem to be no, but I’m not so sure.
Take AirBnB for example. Could it exist without the internet? Not at its current scale surely. But what about the core business model? Could someone generate recurring revenue by offering a centralized listing service for short-term stays in nominally residential housing, using only print media and the telephone? Probably. However, would anybody actually try to build such a business? Probably not. It would be hard to justify the cost of hiring and staffing a call center, let alone marketing, just to determine whether there was deep enough supply and demand to make such a market work.
I suspect there are many such examples in the fintech space. Affirm is one. Would it be possible to offer a no-interest buy-now-pay-later solution to consumers by charging a fee to partnering vendors, say who sell via mail order? Maybe, yeah. Would you want to pay for an army of paper pushers, actuaries, and salesmen just to test this? Who knows, for all I know such a business existed. The point is that this is far less appealing of a proposition than cold-emailing ecommerce operators w/ your pitch and instructions for where to put your js snippet (I assume Affirm’s sales strategies were more sophisticated than this.)
Maybe then the real upside to the computer age isn’t the ability to replace half your call center with a ten-layer-tall decision tree, but instead the ability to test new business ideas at a fraction of the cost required previously. When you think about it this way, the fact that VC actually makes money starts to make sense. The odds that a generally capable team can stumble into something that someone is willing to pay for over a short period of time is fairly high, given that each attempt is historically incredibly cheap. I guess it doesn’t hurt that the public markets have a seemingly insatiable demand for share of anything that involves computers and revenue.