From Software To Nation

As part of my work for a global community I envisioned what this movement could turn into, why we need to grow this community further, beyond tech, beyond nations. We first saw (1) the rise of software companies, then (2) the growth of communities, and now (3) the rise of crypto currencies —(4) last step is ‘nation’. The below post is an attempt to tell the story of the environment in which, I think, we live in, or evolve into.

The rise of software companies

In 2011, at a time when institutional investors’ psyche were still carrying scars from the Dot-com bubble, Marc Andreessen, partner at Andreessen Horowitz, declared “software is eating the world”. In his Wall Street Journal op-ed, he explains how the whole economy will be disrupted by software companies.

“[His] own theory is that we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy.”

He lists each sector, one by one, and explains how they will be disrupted.

That was 7 years ago and this piece still fully resonate.

Since then, we’ve moved forward that direction ; below are some facts to support Andreessen visionary statement on software companies taking over the economy:

• since 2010, more than 190 startups have become unicorns. By the way, there was less than 20 unicorns back then;
• global venture capital investments topped US$155 billion in 2017 from US$54.7 billion in 2011;
• and 2018 forecast for ‘digital transformation’ spend stands at US$ 1.3 trillion, that’s the equivalent of the GDP of Spain or Australia.

It’s happening. Software is eating the world — but not by itself.

Communities are taking over in the digital age, thanks to software.

The growth of communities

Beyond the Tech trend transforming the world, numerous communities have leveraged on software to gather up and organize themselves. Startup Grind has gathered a 1-million-strong community of entrepreneurs running events in 350 cities by automating operations and has 330,000 followers on Medium ; Digital Nomad, a community of 43,000 remote workers, has come together via software-based communication tools, and Hardware Club, a community-based venture capital firm, is curating a 300-strong pool of hardware founders remotely.

Those communities have positioned their organizers as the centerpiece of their network as they become the eyes and ears of their own environments. As Hardware Club mentioned to me, lots of hardware VCs now want to talk to them when doing their due diligence because Hardware Club’s GPs have access to discussions and thoughts of the best 330 hardware startups.

As we are moving from the industrial economy to the connection economy, communities are becoming the most valuable asset ; multinational companies, investors, media, governments and startups want to access communities ; multinational companies want to access communities to understand ‘innovation’ , investors to invest, media to tell stories, startups to acquire users.

Those communities are creating immeasurable amount of wealth, in some cases at the benefit of corporations (i.e. Google, Amazon, Facebook, etc) when those communities live on application built as application layers, in some other cases at the benefit of communities themselves when those communities own a stack in the distributed networks built as protocol layers (i.e. Bitcoin, Ethereum).

Communities have their own currencies

Some communities (i.e. Ethereum, Bitcoin, Brixton pounds) have their own currencies. At the time of writing, the market capitalisation of crypto currencies stands at around US$330 billion. That said, communities did not wait for crypto currencies to create their own monies (those were centralized though). Now we have decentralized networks — and currencies — , and those will enable communities to win:

“Decentralized networks can win the third era of the internet for the same reason they won the first era: by winning the hearts and minds of entrepreneurs and developers.” — Chris Dixon

A new whole economy (world?) is being built from scratch.

All of the above is put in perspective by Balaji S. Srinivasan, partner at Andreessen Horowitz, in his conceptual model The Network State which basic idea is:

“Just like every company is becoming a software company, every country will be forced to become a software country.” — BSS

Srinivasan explains that eventually we’ll see new countries emerge from those crypto-communities.

Yes. New countries.

He lays his argument as such:

Today we have nation state where geography is primary and ideology is secondary (e.g. ideology can be communist, capitalist, etc).

Ideology changes, geographic boundaries don’t.

In a network state, the ideology, the beliefs remain constant, the location changes.

Srinivasan uses the Ethereum annual meetup as an example: 2016 annual meetup was in Shanghai, China; 2017 annual meetup was in Cancun, Mexico .

“Same people, different places, same beliefs” — BSS

Which nation will you be part of in the new economy?