Fred Wilson on atoms and bits in 2018 and ruminating how he first heard it in the 90s — also noting how bits are so far superior — is v interesting and poignant:
But in areas where atoms are involved, not so much. There appears to be a growing acknowledgement in the tech sector that the timeline to fully autonomous vehicles is going to be longer than some had thought. It is not that surprising. There are lots of atoms and lives involved.
I’ve been waiting patiently for the day that I don’t have to do the dishes after yet another amazing meal by The Gotham Gal. I will likely wait longer. Atoms are involved.
I am not saying that we should not work on these harder problems. We should. But we should also understand that the timelines will be longer and the road to adoption will be more challenging. That means these efforts will be more capital intensive and should ideally be investable at more attractive valuations. Sadly the latter has not been the case.
When you are investing other people’s money, you need to be mindful of where the timelines are shortest and the path easiest. And that has been bits for the totality of my investing career.
The idea originally was popularized by Nicholas Negroponte in Wired in the 90s — Nicholas was always so far ahead of the rest of the world, and progressed through life with uncanny vision. He was always a bit out of touch with the world, to his own downfall, but that said I don’t think the digital world would be the way we find it today without his championing of the future. His seminal book entitled Being Digital laid this all out — and it certainly changed my life for the better. Here is Nicholas in 1995:
The problem is simple. When information is embodied in atoms, there is a need for all sorts of industrial-age means and huge corporations for delivery. But suddenly, when the focus shifts to bits, the traditional big guys are no longer needed. Do-it-yourself publishing on the Internet makes sense. It does not for paper copy.
It was through The New York Times that I came to know and enjoy the writing of computer and communications business reporter John Markoff. Without The New York Times, I probably would not have been introduced to him. However, now it would be far easier for me to collect his new stories automatically and drop them into my personal newspaper or suggested reading file. I would be willing to pay Markoff 5 cents for each of his new pieces.
If one-fiftieth of the 1995 Internet population subscribed to this idea, and Markoff wrote 20 stories a year, he would earn $1 million, which I am prepared to guess is more than The New York Times pays him. If you think one-fiftieth is too large a percentage, then wait awhile. Once someone is established, the added value of a distributor becomes less and less in a digital world.
The distribution and movement of bits is much easier than atoms. But delivery is only part of the issue. A media company is, among other things, a talent scout, and its distribution channels, bits or atoms, provide a test bed for public opinion. But after a certain point, the author may not need this forum. In the digital age, Wired authors can sell their stories direct and make more money, once they are discovered.
While this does not work today, it will work very well, very soon – when “being digital” becomes the norm.
Next Issue: Being Digital