How Do Innovators Change the World: A Technological Perspective
A major shift in the real estate sector is about to begin
There are two kinds of innovators.
1- Those who create from scratch but can’t evolve into the worldwide environment;
2- Those who create or buy the creation and immediately move themselves to start the journey.
Somewhere in between, these two innovators can be confused. Both are trying to do something different, something disruptive.
As I keep reading biographies from different exceptional people, like Elon Musk, Steve Jobs, Bill Gates, or Jeff Bezos, one thought starts to shine into my mind.
You have to be in the field, trying a new product, trying ten, one thousand products, and in the middle of all that trial and error, something happens.
By repeating new things, generally, randomness comes in their way.
There’s a story about Apple launching the Newton — a handheld, portable, touchscreen device — in 1993.
It was a revolutionary device for its time. And probably the coolest product that Apple had launched since firing Steve Jobs in 1985.
Jobs, on his return in 1997, proceeded to cancel the product.
Newton fans started protesting outside the office on what was Tim Cook’s first day working at Apple. How ironic.
They have every right to be angry. They love Newton. It’s a great product, and we have to kill it, and that’s not fun, so we have to get them coffee and doughnuts and send it down to them and tell them we love them and we’re sorry and we support them.- Steve Jobs
A decade after killing the Newton, Apple would return to touchscreen handheld devices with the iPhone that changed the world.
I want to believe that randomness joins willpower at dinner, and they decide who deserves to win the lottery.
Don’t Wish It Was Easy, Wish You Were Better
Much of the operating system of our social world consists of a set of instructions about human behavior.
Companies also have operating systems. The laws, social customs, and economic arrangements that face us every day are based on a series of instructions, protocols, and assumptions about the way the world works.
One intriguing story: Microsoft launched its first digital encyclopedia in 1993, called Encarta. Almost at the same time, some independent movement from digital geeks started another digital platform, but this one was made by outsiders. Ordinary people just uploading what they knew, for free, in languages you can’t imagine exist.
If you’ve asked an economist, 25 years ago, who would win this race, everybody would laugh. No one would hesitate to choose Microsoft.
On October 31, 2009, Microsoft closed down the Encarta project. Meanwhile, Wikipedia tends to win the marathon, making it the largest and most popular of all encyclopedias in the world.
Throughout time, things tend to change dramatically. This social software society has suddenly shifted, by quick movements, like an upgrade.
Innovators are the ones responsible for those shifts.
A thousand years ago, we were fueled by a primitive motivation: survival.
Yet, in the modern world, we started to have a second motivation — to seek rewards and avoid punishment. Motivation 2.0. It turned out to be a more efficient operative system, cause survivance was not an issue anymore.
Rewards were the fuel to an organized and modern economic structure.
Although, for the last 10 years, we’ve been facing a reality that remembers what did happen with the Wikipedia case.
The power of voluntary collaboration.
If you turn on your phone, you see dozens, probably thousands of new apps that cost you zero. You see Firefox, a browser open source. Or Linux, a software created by an army of non paid programmers.
This strange movement from Motivation 1.0 (survival mode), to Motivation 2.0 (reward mode), suddenly shifted to an open-source mode.
All of that was created by innovators, who fed the system so that it became more efficient, but more just as well. And this was probably the master switch for the next disruptive revolution.
A recent example is Bitcoin. A centralized digital currency was created by an innovator called Satoshi Nakamoto. He felt the monetary system was not being just to the average human being. On the contrary, it was giving even more money to the 1% richest.
So, in an open-source mode, Bitcoin was born.
Ordinary people like you and me already realized that if you store money in the banking system, you’ll lose 15% a year. Somebody from a faraway country, in the silence of his home, with a device we call a computer, changed the paradigm.
We called him an innovator.
There’s a Way to Do It Better- Find It
Innovators are heroes of the present.
I have a bunch of guys who I’d sell my soul to be with, in a simple dinner, talking about the world and the universe.
Barack Obama, Bill Gates, Warren Buffett, Elon Musk, JK Rowling, Jeff Bezos, Mohamad Yunus, Jerry Seinfeld, Jay-Z, Oprah Winfrey, Michael Jordan, Robert Kiyosaki, Tony Robbins, George Clooney, and a guy by the name of Chamath Paliyapitia.
Have you ever heard about Chamath?
Chamath Palihapitiya is a Sri Lankan-born Canadian-American[1] venture capitalist, engineer and the founder and CEO of Social Capital. Palihapitiya was an early senior executive at Facebook, joining the company in 2007 and leaving in 2011. He is a minority stakeholder and board member of the Golden State Warriors.- Wikipedia
This open-source mode Wikipedia is still working. Thank you.
About Chamath, I can say to you that it has been a source of inspiration.
In the absence of capital, you are irrelevant. With capital you are powerful. — Chamath Palihapitiya
He’s not the kind of guy that struggles to find kind words about what he thinks it’s valuable. He just fucking says it.
At a young age, he had to face a struggling youth in Sri Lanka. Came to Canada and 20 years ago landed in the USA.
What I think Chamath has in a disruptive way of thinking, is that he really wants to make a difference. He hates Wall Street as it is. But he also believes in the power of the capital, to produce real change.
Chamath Palihapitiya, who leads Social Capital, took Virgin Galactic Holdings public via a SPAC and has a pending deal to bring Clover Health public via Social Capital Hedosophia Holdings Corp III. Palihapitiya also took three more SPACs public that is searching for deals with IPOD, IPOE, and IPOF.
SPACs have a simple model by raising funds from the public markets and find a company to merge with. Some people think this trend is going to soar for the next decade.
Byrne Hobart explains it better:
In the ’90s, you could start a company, prep it for IPO, take it public, and white-knuckle your way through the lockup, all before the bubble popped. That’s why the most compelling explanation for the SPAC boom is not that the IPO process is costly (it’s expensive but cheaper than a SPAC), but that it takes a long time. And that’s especially challenging for companies that want to ride a hype wave.
The largest online consumer retail real estate company, Opendoor is gonna merge with IPOD, and will probably revolutionize another entire sector, as Tesla’s doing with the auto and energy industries.
Transferring the real state industry to the digital world, Chamath may be responsible for another dematerialization of a sector that moves tons of money, all over the world.
It happened with Apple, which dematerialized the mobile phone industry, Facebook which dematerialized our social network, Amazon which dematerialized the storefronts, Tesla that is dematerializing auto and energy industries, and Bitcoin witch is dematerializing the monetary system.
Now it’s time for real estate.
The setup for Chamath is to democratize these new platforms. His goal is:
- Partner with an iconic technology company;
- Help them transition to the public markets;
- Enable them to fund long-term growth;
- Build a legacy company.
Chamath’s vision, as an entrepreneur, is brilliant.
He saw an industry where 68% of Americans are homeowners. 5 million homes are sold every year in the US. The largest undisrupted (I love this word) market in the US worth $1.6 trillion annually. And it’s a highly fragmented incumbent, with low NPS (Net Promoter Score), and 28% do it as a part-time job.
Opendoor will dematerialize all the bureaucracies the real estate industry has. It will do the transactions faster, safer, and more efficiently.
That’s the beauty of technology, these days. It’s a powerful tool to leverage all the old school systems to a code reliable structure.
Chamath even said, when he was for the first time presenting the merger on CNBC, that he and his team made a Buffett/Munger approach on asking themselves what was their margin of safety.
I loved his approach to this merger. I keep learning with him about how technology is really changing the world for the better.
Like Chamath, I’m a dreamer. And dreams are being designed by all these innovators, that in these disruptive times, found technology in the perfect physical state to dematerialize everything from the solid-state, to the digital state.
Let’s keep dreaming.
Final Thought
For more than 100 years we faced the same paradigm. We were victims of the post-industrial revolution.
Now we’re facing another technology disruption. It’s here. It’s happening now.
I believe that we are privileged to be watching all this revolution, in the comfort of our homes, without wars, without hunger, without destruction, as happened in the past.
We count on innovators to transform planet Earth into a better place.
No pollution, no noise, at peace.
Thank you,
Nuno
