Software isn’t eating the world; it’s feeding it. In fact, since Netscape founder and venture capitalist Marc Andreessen wrote his iconic piece for the Wall Street Journal in 2011, data has accumulated to show that hardware businesses are resurgent, and software, rather than replacing humans, is enabling their greater productivity. As the Internet of Things expands and more physical objects are connected to the web, there will also be an even greater demand for manufacturing of those products, and a need to make people more efficient in their creation.
Andreessen’s arguments prompted a predictable narrative about the “rise of the machines” and a conviction that software was destined to replace vast workforces and profoundly change our lives. There is no disputing that software has, in fact, dominated large sectors of global economies. However, in the three years since Andreessen’s predictive analysis a reality has evolved that offers a more nuanced view of software and its impact.
In August 2011 when Andreessen published, unemployment was 9.8 percent and today it hovers almost three percentage points lower on a recurring national average. The Dow Jones Industrial Average, which is a composite of 30 large publicly traded corporations, has risen 48 percent. In contrast, the stock price of Salesforce.com, which became the poster child for cloud computing success, outstripped the traditional business indices by only four points, increasing 52 percent during the same three years.
Some things might be too big to eat.
The most relevant example of this might be how software is evolving in the sales profession. In the past decade, vendors dominated sales relationships, and customers lacked significant influence. The dynamics of that business connection have been reversed by software advancements. A number of technological alternatives have emerged that empower potential customers of a product or service and give them access to tremendous vendor insights. There is also, however, a new class of applications in the market to make sales reps smarter, increasingly responsive, and more competitive.
“Software definitely is not eating the sales profession,” said Jason Wesbecher, CEO of myDocket. “It’s feeding it, and, frankly, it’s the kind of nourishment that’s been needed to improve efficiency, relationships, and profits. And even better, sales people are embracing the innovations in a big way.”
Wesbecher’s startup in Austin offers a tool that resides insides of a salesperson’s email inbox. The technology helps answer questions related to whether the prospective customer opened an email, how long they spent reading the proposal, which product sheet was preferred, and to whom they forwarded the presentation.
According to Wesbecher, there is a kind of rejuvenation among sales professionals as a result of software. They no longer are compelled to make cold calls to target lists. Their strategies and tools used to create a new world of buying include LinkedIn to identify and understand customers, InsideSales to predict when to call, and myDocket to learn if emails and collaterals are getting attention from prospects.
“We are seeing some outsized performances that are directly attributable to these predictive and analytical tools built specifically for sales people,” Wesbecher said. “Double-digit improvements are common in response rates, connected calls, and buyer engagement. There is finally a way to objectively measure engagement with customers and alert a sales rep the moment a prospect is hooked.”
Amazon software might be trying to eat the retail world but there are alternative ideas enabling traditional brick and mortar stores to take back market share. These are dependent on hardware that leverages sales data and software marketing tools.
A startup that has emerged from the Austin Technology Incubator, eyeQ, is using tablets with cameras and software to make certain in-store retail buyers get reviews and data needed to make a decision. Instead of looking at their phones for reviews while in the store, and, ultimately, purchasing online, the tablet displays the info during the retail experience for the customer. The department store is also able to gather buyer behavioral data to improve marketing.
The amount of business being transacted in the cloud may be increasing but innovative software also spawns hardware ideas. The most obvious manifestation of that relationship is the growth of wearables, personal items like Google Glass or the considerably lesser known Up, a stylish device that connects to a lifestyle management platform focusing on fitness and productivity. Although Up has had a bumbling launch, Andreessen’s venture fund put $49 million into Jawbone, which created Up, and the amazing disappearing Bluetooth headset.
Following Andreessen’s money indicates he clearly believes in hardware, too. The founder of Twitter, Jack Dorsey, made his next big move in hardware when he launched Square, the dongle that plugs into an iPhone and allows anyone to accept credit card payments. Engineers consider the software that powers Square to be brilliant but it is the device that has the potential to become a personal consumer wallet and even take over the cash register business.
Which is why Russell Samuels of Mantella Venture Partners, along with many other investors, is convinced, instead of software eating the world, we may be on the verge of a hardware renaissance.
“Think about it,” Samuels wrote on his blog, “Nearly all of the hottest startups in the recent cycle have been software only: Facebook, Twitter, Zynga, LinkedIn, Groupon and Pandora. Investors have been ringing the ‘software only’ bell for 10 years and for good reasons: no inventory costs, faster cycle times and above all, low capital intensity. Given all this, why are we on the verge of a Hardware Renaissance? I think the broad trends are well understood and include: the rise of low cost Asian manufacturing, the movement towards universal smartphone penetration (as smartphones will often be the ‘brain’) and the ability to quickly and easily update hardware over-the-air.”
Investors are still chasing good ideas, regardless of how they are delivered. Smart software concepts drive hardware evolution and both create new businesses. Money follows.
Wesbecher’s myDocket has just taken another round of capital from Austin Ventures as both his revenues and customer satisfaction continue to rise. He is changing a profession and making money for investors and employees.
“Software might make some jobs go away,” Wesbecher said. “But I think it’s almost certain it creates iterative new forms of work. Maybe these tools turn the sales person into more of a smart digital marketer. We hope to find these things out as our company and the industry evolves.”
And that’s not eating the world; it’s nourishing it.