Archive for August 2015
A16Z has a delightful interview of John Markoff‘s long view of Silicon Valley and technology in general. It discussed the oft-mentioned story of how a 13-person Instagram toppled Kodak (which Markoff disputed given how Fuji managed to thrive). But that go me thinking that the story of Instagram is even more endlessly fascinating.
Waaaay back in 2012, when Instagram was acquired by Facebook for over $1 Billion, it sent shock waves through the valley and general buzz was that Facebook way overpaid for a $0 revenue 13 person company. Today, the pendulum is on the other end where Zuckerberg is hailed as visionary and analysts are now predicting that Instagram could bring in revenues in excess of $2 Billion just next year.
The podcast dives into the popular topic of secular stagnation and “how technology is everywhere except in productivity number”. Besides the Clothelines Paradox (which posits that GDP is not measuring all that we produce), we are also facing an Instagram Paradox: in 2012, the “GDP” of Instagram was $0, but the total present value of GDP was a lot more than that, even $1 Billion screams cheap in retrospect.
So, instead of a secular stagnation, are we just in the nascent stage of another a huge technological renaissance where work done today isn’t creating much “GDP” today but is really laying the foundation for value created in say 2025?
Update: Michael Spence speaks more eloquently on this topic