Before founding business intelligence company MicroStrategy (and subsequently earning--and losing--billions), Michael Saylor studied the history of technology at MIT. He's always been fascinated by the way an invention--be it train, telephone, or 747--changes society. The CEO recently wrote The Mobile Wave to explore the paradigm-shifting prevalence of smartphones and tablets.
Fast Company spoke with Saylor about the dematerialization of industries, the virtues of HBO GO, and how entrepreneurs can leverage the oncoming market transformation.
FAST COMPANY: In The Mobile Wave you claim that this mobile revolution is on the same scale as the Agricultural Revolution or the Industrial Revolution.
MICHAEL SAYLOR: I believe it is.
The last big wave, the Internet wave, affected the lives of people who were essentially just ages 20 to 45, working at a computer. If you look at the scope of that, it had a small impact on brokerage, it had a small impact on retail. Amazon displaced some catalog retailers, but Amazon 15 years ago wasn't obliterating Best Buy or hardware store chains or impacting Walmart or the others. The Internet wave was impacting something on the order of 5 percent of the overall economy.
On the other hand, if you look at the mobile wave, it seems pretty clear that you're going to see 5 billion smartphones. Apple's shipping 37 million in 12 weeks. Samsung shipped 50 million in the last 12 weeks. So you're at 100 million every three months. You're at 500 million in a year, assuming no growth; you can extrapolate that out linearly, and you get there within the decade. But of course nothing goes linearly, it will go a bit faster.
So if you look at a world with 5 billion smart phones, and it touches people ages 6 or 7 years old up to age 75 or 80. And it's 24 hours a day. And people are sleeping with them.
There's going to be 5 billion smart phones; there's also going to be 5 billion tablet computers. And this is the part that most of the world hasn't come to grips with, which makes it such an incendiary movement.
We're in an inflection point where it's cheaper to learn to read on a tablet computer than it is to learn to read on paper. And that being the case, it's only a matter of time before every 6-year-old kid has a tablet computer, and we know for a fact, 3 to 4 year old kids are using tablets and iPads, and 75 and 80 year olds are using them.
So instead of 5 percent of the economy being remade, it's 50 percent. I think this puts this on the scale of being the biggest transition we've yet experienced in the history of technology. And I don't think that's hype at all.
So if it's 50 percent of the economy, which industries are going to fall?
The industries that fall first are the industries that either produce electromechanical items that are now inferior to their software substitutes, or the industries that produce a mechanically created service that's now inferior.
If you look at television, I now watch HBO almost exclusively on a program called HBO GO on an iPad. I don't need remote controls; it has every television show that's ever been on HBO, every season of the Sopranos, every season of Deadwood at my fingertips within 10 seconds. And it's so much easier to use than the four remote controls, the four boxes sitting underneath the one television with the eight wires hooked up to five speakers. I look at all those things and think they're just electromechanical boxes I want to throw away. And HBO now becomes to a certain degree not just a company that creates content, but it becomes a software company.
Would you say all companies are now software companies?
Based on my assertion, at least 50 percent are. Companies that make keys, credit card companies, any company in the service business--anything to do with a consumer is probably a software company. If you're a retailer, a bank, an insurance company, or an entertainment company, you're a software company. If you open doors, if you start cars--Mercedes Benz has a key that's a software program that runs on an iPhone.
So everything that consumers do is software?
If the software can change the consumer experience, it will probably find its way into the product. If you were walking me through Best Buy, I'd look around and say, I don't think software's going to change the refrigerator or the washer and dryer or the microwave oven so soon, but I think software is going to completely obliterate the television, because the television experience is so much better if you have decent software.
On the other hand, if the product doesn't need a lot of intelligence--if you're shipping park benches, you're still going to be good for a while. Gold, diamonds, platinum, uranium, polyurethane: They're probably going to be immune from the mobile wave for a while, but any service to distribute them or resell them is going to get hit, and all those consumer goods that are stupid that people would like to become intelligent, all of those things are going to be remade over the next decade.
How can entrepreneurs ride that tidal wave instead of being swallowed up by it?
The first thing to do is to evaluate all the conventional businesses and traditional ways of doing things and figure out which ones are most inefficient in the context of today's world. For example, in the old world, I would have to physically print the X-ray and read the X-ray in my hand; in the new world, I can create a digital copy of the X-ray and I can move that X-ray anywhere on earth within 5 seconds. And it can be viewed at even higher resolution on an iPad or a tablet computer. It stands to reason that every medical system that relies on local doctors reading X-rays has a massive amount of inefficiency.
It's really a crystallization, right? Something crystallizes when it moves from a state that requires a lot of energy to a state that's lower energy: the condensation of steam to water to ice gives off energy.
If you're an entrepreneur and you want to find a way to capture that, I would just go through every part of the economy and figure out what are we doing in a mediocre, inefficient fashion because of the previous electromechanical constraints that were placed upon us, and ask "Is there a way for me to create a brand or a service or a product which catalyzes the transformation into some new, far more efficient state?"
[Image: Flickr user Mengjie Jo]