Startups and Technological Momentum

Source and verification limitations (2026-11-02): The post is tagged Wu Jun and Letters from Silicon Valley, but the matching original manuscript has not been obtained. Steamships, IBM, Microsoft, Google, and Apple serve as strategic analogies in the article. PC performance doubling every 18 months cannot simply be equated with Moore's law. Strong causal claims about companies being displaced and benefiting from technology have not each been verified. The original post did not include a URL for a directly comparable version of the same text. ---- How Startups Can Beat Established Giants—2 #HarnessTheTrend #UseTheMomentumOfYourEra At the end of the eighteenth century, large sailing ships were high-tech products: big, reliable, and inexpensive. Steamships had just appeared and were, by comparison, small, unreliable, and costly. But steamships had a killer feature that sailing ships lacked: they could travel against the wind and current. That feature alone could not have enabled steamships to replace sailing ships. However, their arrival coincided with the Industrial Revolution, characterized by advances in machinery. Any technological advance at the time could help steamships, but offered little help to sailing ships. Steamship development was therefore propelled by the technological progress of the entire era, and sailing ships were eliminated. At the beginning of the IT revolution, IBM defined the industry's rules: large computer systems, expensive purchase prices, and equally expensive annual service fees afterward. These gave large corporate customers stable IT services. Then a disruptor arrived, developing BASIC on the small, slow Altair microcomputer. Its advantage was that individuals could afford it. Even so, IBM did not think this would affect its existing market. But Moore's law helped this young man. PC performance doubled every 18 months. Any revolution in semiconductor and storage technology could help him, enabling personal computers to start doing the work of mainframes. The benefits of Moore's law for IBM's large systems, however, were not particularly obvious. At the time, Time magazine saw this and called the young man the future master of the universe. In less than 10 years, the young man's company began threatening IBM and soon replaced it as the symbol of the IT era. That man was Gates, and his company was Microsoft. In the PC era, nobody could challenge Microsoft and Intel. They were later replaced by the unassuming Google, a small company that offered very few functions and had a rather bare-bones interface. Google's killer advantage was its use of links on the internet. Its PageRank algorithm essentially used links to improve search relevance, whereas earlier searches began with the relevance between the webpage itself and the keywords. As the internet grew and its links became stronger, traditional search methods struggled to benefit, but Google's algorithm could. Thus, when Google had only a dozen or so people, the search company Inktomi, with thousands of employees, could no longer compete with it. Similarly, in software development, Microsoft had long been based on the PC, while Google was based on the internet. Any advance in internet technology naturally helped Google but did little for Microsoft. This also explains why Google, with only 2,000 people, could develop products faster than Microsoft with its tens of thousands. Similarly, Apple's phones rapidly replaced Nokia's, benefiting from advances in surrounding technologies: Moore's law, faster wireless internet, rapidly falling touchscreen prices, and a surge in the capacity of solid-state storage (SSD). The progress of the entire era, one could say, directly helped Apple while making life difficult for Nokia. We can now summarize the characteristics of “modern guns and cannons,” or disruptive innovation. First, you need a killer feature. Without one, nothing else matters. Many people can see that. Second, the disruptor's—the little ant's—killer feature must readily benefit from the related technologies of the time, allowing it to improve rapidly, while the traditional product struggles to benefit from those advances. This is what many people overlook. Steamships benefited from the machinery revolution, Microsoft from Moore's law, and Google from the internet. Many people invent a better technology yet gain little advantage against existing companies because theirs is an isolated technological improvement that does not benefit from other technological advances of the era. Returning to entrepreneurship, everyone wants to build their own “modern guns and cannons.” First, we should all understand that newborn babies are not beautiful. Disruptive innovation is bound to have many imperfections at the outset, but it must have two characteristics: a killer feature, and surrounding technologies that can continually amplify that feature's power. #WuJun #LettersFromSiliconValley #Dedao [original tag: 得道]