Last week I was lucky enough to meet Vint Cerf, one of the fathers of the Internet. Among many other achievements, Cerf worked on the protocols that later became TCP/IP. Not many people in history can claim a larger contribution to mankind. Unsurprisingly, despite being 72 he’s full of energy, humility and sense of humor. I had the honor to share a panel with him, along with Santiago Bilinkis and Ariel Muslera.
I based my talk on the study of Kevin Kelly, the legendary editor of Wired Magazine, referring to some of the technology trends that will probably reshape the web as we know it, and generate immediate winners and losers. The line between opportunities and threats has never been thinner.
The first encompassing trend is the proliferation of screens, as Kevin Kelly would describe it. Just a few years ago we had two screens at home: a TV and a PC. Now we carry three connected devices: a laptop, a tablet and a mobile phone. Connected devices are not just computers anymore. They are TVs, running shoes, freezers, dispensers, airplane seats, etc. The “internet of things” is finally here. If a service is only prepared to run on a single device, it will be quickly kicked out of the game. Mobile screens are often equipped with a GPS, and connected to social networks. This combination, often called SoLoMo (Social + Local + Mobile) is rapidly changing the rules of e-commerce. In MercadoLibre, we have spent more than a year rewriting our platform to build a common and open service layer to fulfill the needs of many screens. If we hadn’t made this decision, we’d have found ourselves in a strategically lost position.
The second game-changing trend is the explosion of data. In 2011, 1.8 Zettabytes of data will be created or replicated. That’s about 4 million times the content of the Library of American Congress. Zuckerberg’s Law stated that the amount of shared data will double every year. This year, the number of connected devices will be larger than the human population on the planet. In a platform like MercadoLibre, there are 50MM search queries a day. The key to a good search is data, algorithms are becoming commodities. One difference between winners and losers will be the ability to master “big data”.
The third key trend is that Accessing is better than Owning, when the entry barriers are low enough. Owning is expensive and distressing. Why would I want to own a book if I can have it whenever I want? And what about a WebServer, a Network service, a CRM platform? The difference between a product and a service is blurring. Why is this a game-changer? Because entry barriers are imploding, it’s become too easy and cheap to launch a product. If a current leader is not offering a good balance between value and cost, a strong competitor may emerge overnight.
However, is there anything that is not changing? Are there value creation mechanisms that were great ten years ago and will also be great in ten years?
Reputation is one of those constant values. It´s not easy to replicate. A seller in MercadoLibre has a good reputation because she sold a thousand units to different buyers. This is helpful to the next buyer because the reputation is curated by the brand and can’t be self-proclaimed by the seller. There is a genuine value creation within a large ecosystem. You are on Facebook because your friends are on Facebook. Network externalities are very powerful. This was true ten years ago and will be true in the next ten years.
Attention is another basic value that hasn’t changed and won’t change as a value source. “Where eyeballs go, money will follow”. Countless ways of exploiting attention will emerge, as new screens and new ways to interact with them continue to appear. Nonetheless, one constant remains: people will still be willing to pay for attention, and not just advertisers. Attention, like reputation, cannot be easily copied.
As a conclusion, despite the fact that technology is evolving amazingly fast, there are some constant value sources that remain as strong as ever. If your service is based on a friction imposed by the current technology, you should be really worried and doing something about it. On the other hand, if you’re offering a service that relies on a true source of value, change should be more an opportunity than a threat to you. In addition, behind all these changes are human beings. Maybe talent is the most constant and important value source of all.