Why did big tech stop innovating in 2014?
Despite the prevailing attitudes of the day, we are living in an era of relative stagnation. Back in the 2000s and early part of the 2010s, it felt like there were innovations happening every minute. Every month a new exciting app was coming on line. Every quarter, new hardware came online, from phones, to mp3 players.
However, look around you. Most products aren't showing the pace of innovation that we saw back then currently. Your phone is probably the model 10+, with innovations creeping with every new release. The apps you used 10 years ago are likely the same ones you still use now to keep in touch with friends.
So what gives? If we're living in the age of innovation and tech, why does it all look the same?
The answer is that the tech sector forces this type of stagnation, and that the current monopoly of companies is actively operating (not maliciously) in a manner that prevents further innovation
Stage 1 - Living the visionary life
Most companies start all the same. A founder begins with an innovative idea. In the early stages of the 2000s, the hyper acceleration of software was driven by a simple idea:
The old ways of doing business now have a new channel to be moved online, and the people that will shepherd this move will be rewarded with vast riches.
Pre-2000 Hospitality: Hotels
Post-2010 Hospitality: Air-BnB
Pre-2000 Advertising: TV
Post-2000 Advertising: Facebook
As seen, given this massive opportunity, and low cost to entry as a result of the giant gap in the market, we witnessed some of the wildest growth driven companies in the history of business.
And as we will see later - this low barrier of entry will have a high price to pay.
Stage 2 - Being on the top of the world
For most mature companies, the time spent at the top of a market is usually years, if not decades. The slow moving market forces dictate that once you reach at the top, there is a large amount of inertia preventing others from overtaking you. It's why the number one position is so coveted.
However, for the startup companies that ascended so quickly, the status of number one is much more fleeting. Consumers have vast choices, which creates a lot of opportunity for market movement. Other companies can ride the same elevators up and displace you just as fast.
This ultimately means that the innovative tech that propelled companies to the top, quickly degrades in the open sun of the free market. And with this degradation, also goes any market position that the company had.
At this stage - many companies make a decision.
Most companies do one thing. They can double down on the product and what got them to the top. They can continue to innovate and deliver new products. However, they find that the problem of luck and probabilities begin to hinder them. In addition, every new product is a big risk that can self-destruct in the face of the company.
What ends up happening is a rapid decline into irrelevancy.
Stage 3 - Decline and Stagnation
Just as fast as the company grew to the top, they begin their descent to the bottom.
It must be a very interesting experience. Growing 10% WoW for a few years, only to decline 10% WoW thereafter.
At this stage, the companies that solely focused on continuing the same strategy of developing their product will begin to stagnate. Many will continue attempting to pump more money. However, it will not deliver in the long run.
On the other hand, some companies take an alternate strategy:
They can begin a new strategy. While they do continue developing their product, they begin opening new fronts through acquiring new product lines and/or other successful companies.
And as they grow in size, the size of their acquisitions can grow further.
And this is what stifles the innovation.
Previously, in the early days of the technological revolution, there were no big massive gorillas ready to stifle innovation.
The existing non-tech behemoths of the day did not believe in the power of tech. And the thousands of small tech companies that were competing with each other did not have the financial power to make these acquisitions.
Now however, these few companies command enough financial capital and power to make the changes they deem necessary. And in this case, it means acquiring anything that will continue delivering massive advantages for the company to keep them alive.
And this will continue to happen - until they are broken up.
And why 2014? It's because that's when Facebook purchased Whatsapp.