Software Takeover

Marc Andreessen, of Netscape and Mosaic fame, and current uber venture capitalist, wrote a fascinating essay last year in the Wall Street Journal.  In Why Software is Eating the World, he makes the case that software-based companies are gradually assuming a dominant position in the economy.  Andreessen offers the following as the basis for this phenomenon:

Why is this happening now?

Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.

Over two billion people now use the broadband Internet, up from perhaps 50 million a decade ago, when I was at Netscape, the company I co-founded. In the next 10 years, I expect at least five billion people worldwide to own smartphones, giving every individual with such a phone instant access to the full power of the Internet, every moment of every day.

On the back end, software programming tools and Internet-based services make it easy to launch new global software-powered start-ups in many industries—without the need to invest in new infrastructure and train new employees.

He goes on to name software-based entities that are now dominant in areas once ruled by traditional companies — Amazon, iTunes, LinkedIn, and Netflix.   Reading this led me to ponder why these companies became dominant.  Obviously, software made it possible, but how?

I love books.  Borders was my favorite bookstore.   Each week, a few hours were devoted to browsing the shelves at Borders for the latest science and technical books. Starting around 2001, I began buying books on Amazon.   I still enjoyed my evenings browsing at Borders, but Amazon began to change my buying habits, and cost had little to do with it.

One of reasons I liked Borders was its inventory. It carried more titles than most bookstores, especially in computing and programming books.  Weekly visits to Borders allowed the discovery of new titles as soon as they appeared.  Looking back, I now realize that visits to Borders were as much about finding out what titles were available as they were about buying books.   When it became obvious that Amazon’s inventory pretty much reflected the pool of in-print books (at least in science and technical domains), my visits to Borders dropped.   The comprehensiveness of Amazon’s inventory, along with the availability of customer reviews, made my visits to Amazon much more productive than visits to Borders.

In the article, Andreessen states that health care and education are the next two domains that will be revolutionized by software.  His investments in startups that focus on both markets match his beliefs.  Are there healthcare opportunities that are analogous to  those exploited by the likes of Amazon, Netflix, and others? I believe so; however, I don’t think those opportunities are readily apparent to the average observer.   In 1998, when I heard about Amazon, my initial impression was, “how can I possibly buy a book over the Internet without being able to see what’s inside”?  It didn’t seem to be a good idea, and it took a few years before I actually tried Amazon.    Amazon solved problems I did not realize I had.

The companies that Andreessen cites used technology to create novel solutions to old problems.  The novelty of the solutions, though all seem obvious now, is attested to by the fact that the new approaches were not invented by the companies that were dominant at the time the upstarts appeared. The old-line companies should have understood their markets better than the newcomers.

Henry Ford is reputed to have said:

“If I had asked people what they wanted, they would have said faster horses.”

Those with unsolved problems rarely are able to articulate novel solutions. Yet, when novel solutions for common problems do appear, often they are initially ignored or rejected.  So, how does this translate to health care?   Is it reasonable to expect that health care will prove to be more enlightened than other domains?

There are plenty of well-defined informatics problems: providing knowledge at the point of care; collecting research-quality data for analysis; enhancing information exchange; improving results management; and enabling true population health management, to name several.   Electronic health record products are currently seen as the solution to these problems.     This raises the question of whether clinicians’ complaints, and implementation costs and complexity are necessary evils or symptoms that we are solving the right problems with the wrong tool.  EHRs are the obvious solution, but are they the best solution or simply faster horses?   Incentives are unnecessary when the benefits of acting are evident.

In case you are wondering, no, I do not have a brilliant answer to the above–only more questions. To be honest, should I hit upon an answer, it will not make it into a post.  Instead, I’ll be polishing my pitch to Marc Andreessen.



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