Arguing from First Principles, a post Brad wrote for USV’s site in January 2009, is one of the few posts that I reread regularly.
While the post lays out USV’s investment strategy, it also provides a general framework for how to think of the change being ushered in by the web.
- the economy is defined by scarcity in resources, production, and distribution
- the web is fundamentally transformative, with a raw material (data) that costs little to produce, replicate, and distribute
- the first markets to fall are those with fewer gatekeepers who have a vested interest in the current market’s structure
“The best internet based businesses radically restructure markets. … It makes perfect sense that information markets will be the first to be disrupted by the web, but media is not the only market where services can be delivered as bits over the web. Banking, education, healthcare, and government will also be fundamentally changed.”
If you are a player within one of the markets Brad lists above, I would be thinking deeply about how to embrace the transformative power of the web. Because, as Google’s Eric Schmidt famously wrote, “Don’t bet against the internet.”