Atoms vs. Bytes

A byte is one of the smallest units of data, the sequences of 0’s and 1’s that represent everything you see on your screen. They make up our digital world. Atoms are the smallest units of ordinary matter that make up our physical universe. Bytes make up the virtual world and atoms make up the physical world.

“Software is eating everything,” is a maxim that has held true over the last decade. Over the last decade we’ve seen the rise of SaaS and how the takeover of every industry. You can’t work without a computer and an internet connection. Most of the older big technology companies focused on making the most out of the internet. For example; Facebook gives friends a place to meet, Google finds whatever you need, Slack lets you communicate better, Instagram lets you show off how great your life is, and Twitter lets you show off how bad your life. These all make the internet a better place. This trend has transitioned to making the physical world better. Some prime examples of industries that have seen this change are commerce, accommodation, and logistics. They’ve all taken real physical wants and transitioned them into digital products.

Shopping shouldn’t be time consuming, this idea has changed the way we look at commerce. You should be able to take a few clicks, then open your front door hours or a few days later and have whatever you need. The most notable companies in this space are Amazon ($AMZ), Shopify ($SHOP) and Instacart. Amazon allows you to fulfill any general product needs, like a phone charger or a book. It has created ways to get you your products faster, cheaper and with an amazing User Experience. Shopify provides a backend for small businesses to move online. It allows you to buy from specific brands and creators. Instacart lets you can buy groceries from local stores and have your bags delivered to your front door within hours. Food delivery has the highest global demand. Now you can spend your Saturdays on the couch or outside rather than in grocery stores.
E-commerce has been one of the most important tools of our age. It has unlocked a revolution in consumer spending. These companies have allowed consumers to buy physical products in a better way. They’re all using the internet to enable the physical economy. Since 2014 e-commerce has more than tripled to $4.1 trillion dollars. It has increased globalization even further by exposing consumers to international products. This has made a more diverse marketplace, that can serve different customers in different ways. The biggest revelation of the internet has been e-commerce is Amazon. Amazon has made brilliant investments in the future, like Amazon Web Services. This is reflected in the value of its stock, one of the best performers on the market started by flipping books on the internet. Amazon is probably the most fascinating company in the world with how it has handled its growth.

Tourism has been turned upside down by the internet. Gone are the days of finding mediocre accommodations for exorbitant prices. Now you can spend a weekend at a lake with a bunch of friends at an sensible price point. There are thousands of physical locations and sleeping spaces that go unused. This began with Expedia and, and has now transitioned to Airbnb. Airbnb used tech as a lever to let people fill unused spaces in their homes. Airbnb transformed renting out air mattresses on the living room floor to a billion dollar company. They’ve utilized the shared economy, to solve for unused capacity. Companies like Airbnb have put butts in beds by broadening the definition of what can be accommodation. They’ve transitioned from the old hotel model a friendlier and homier experience. Accommodations have gotten better because of the availability of information that is available. Social media sites like Instagram have made design a lever in the hotel industry. Boutique style hotels have become more common because of the growing emphasis on aesthetics.

Logistics is the glue that holds transportation together. With transportation there are two categories, moving people and moving things. Moving people was changed by Uber ($UBER) & Lyft ($LYFT). Most have used these ride sharing technologies to get around when they don’t have a car or late on a Saturday night. They’ve taken the Taxi industry and turned it upside down by changing the riding experience. These companies have created significantly better logistics networks that route drivers to customers. Instead of waiting on a taxi for an unknown amount of time, riders can know exactly how far their driver is and when they will arrive at their destination. These benefits extend to drivers as well, they know their ride will be waiting for them. The Taxi industry is famous for having leaks, since it is a bunch of cabs taking random walks hoping for a ride. Too many may be in one area, too few in another. If a rider calls a cab the driver may never show up because they’ve picked someone else up on the way. In short it was a disaster. What the ride-sharing industry got right is using bytes to move atoms. Instead of relying on individuals who have their own incentives, they have let computers make the larger scale decisions to squeeze every bit of efficiency out of the network. Another industry that has seen a radical transformation is the shipping industry. Ports are some of the most complicated environments in the world because of how many stakeholders there are on every load. Almost everything requires a shipping network to get to where it’s going. Freight-forwarding is all about how to get things from A to B; it includes everything from trucking to customs. An up coming tech company called Flexport is modernizing this practice with software, and emphasizes human touch. Freight forwarding is one of the last industries untouched by the internet, because of its complexity and reliance on relationships. It relies on local experts to help get loads through customs and find extra spaces on freighters. Transportation and logistics don’t work without people. At this point transportation companies are finding ways to squeeze efficiency out of our existing networks. Uber/Lyft requires drivers that can operate the cars and create a positive experience for riders. Flexport needs local experts to make things happen, and to deal with crisis situations.

Software is eating the world. It affects every industry and vertical. It is exciting is how it is beginning to affect the physical world in many different ways. I’ve shown you how I see it changing our world through commerce, accommodation and logistics. Software still serves people, and we live in a physical world. Software will continue to improve our physical world, and improve connections between people. Gaps that existed in the past are filled to make our better, which is where the power of changing technology lies. All this being said I could be wrong, send me an email if you want to learn more or disagree. I’d love to hear your thoughts! If you enjoyed this post get all my articles and learn about more things that interest me in one email per week, here.

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