Digital Titans Get Physical
The digital revolution has brought the world a number of billionaires who have made their massive fortunes in a rather quick manner. They would produce millions of copies of their proprietary software in hardly any time, or bring the internet closer to hundreds of millions of users. Their fortunes would scale incredibly fast, due to no real physical aspect of their product. Now it’s become interesting to watch some of these top digital entrepreneurs head into the more challenging business of shaping atoms, not just bits.
Consider the net worth of the Google founders. Both Larry Page and Sergey Brin each have an estimated net worth of $37-billion. If we were to divide their wealth evenly from the start of Google in 1998, each of the innovators have earned $5.7-million per day. Broken down further, it equals $240,000 an hour. Just think: if either of them sleeps for eight hours they’ve made $1.92-million. Like Bill Gates before them, their product is digital, it contains 1s and 0s: “electric-air”: a product pretty easy to rapidly scale.
Facebook creator Mark Zuckerberg has over 1-billion people on his network, and I sometimes imagine he gets depressed there are not 100 times more humans alive on the planet, so he could further expand Facebook.
I find it interesting to watch Alphabet (Google) CEO Larry Page go from a business of offering digital products to new products that are physical, products people can touch, travel inside of, and possibly get hurt with. There is a considerable amount of human “psychology” involved in what car a consumer buys over another. All of this makes the world of physical products more difficult and slower to scale than digital ones.
Google has moved in a cautious manner with their self-driving car project. They know the American consumer is most familiar with the car ownership model and may not yet fully understand how their car will function as a service, possibly like a variation of Uber. I’ve heard Google is fearful of being seen as the next Segway, a new transportation innovation that didn’t take off. (I wonder if they know that Segway didn’t have even one transportation expert on their board of directors?*)
Perhaps their ill-fated Google Glass offering gives them reason to be cautious in the mobility space. I expect that experience showed Larry Page and his company that shaping physical products is not that easy. People wearing early Google Glass were often seen as nerds, or seen as having video cameras rolling 24/7, and were asked to stay out of some restaurants, buildings, and bathrooms.
In car design, we often find one consumer likes a particular look, while another likes a completely different style. Designing vehicles people get inside of and drive (or ride) is more complex than dealing with 1s and 0s that get along perfectly.
Apple actually has an amazing track record with designing physical consumer products. But they are all very small when compared to an automobile. I think the largest of their current products is a bit larger than a baking sheet. I expect their upcoming electric car will be challenging for them to design, since it’s a completely unfamiliar realm.
Uber is the most amazing transportation start-up of our time. The company has one foot in Google’s world, and the other in the physical world of taxis and automobiles. The company is a brilliant “hack”—creating an all-new use of millions of our cars with only a new app. The success of Uber has made founder Travis Kalanick a billionaire, too. While he likely now has more money than anyone in the world of physical mobility, if we divide his wealth like the Google founders, he makes about half as much each day as they do.
But since Uber is a physical product, the company has had to deal with problems in the U.S. as well as in Germany, India, Spain, Columbia, Italy, Denmark, Canada, China, England, Australia, Brazil and Costa Rica, among others. I expect Uber employs more lawyers than any start-up in history. This is another aspect of the challenges of creating physical offerings.
I am excited companies like Google are willing to pursue a market in the physical world. Physical products are not as likely to scale as fast, but it’s the world where we live and it’s ready to all be re-designed. Regardless of the massive amounts of money these digital powerhouse companies have made, there is far more money to be made in the physical world.
*Editor’s note: The CEO of Google Self-Driving Cars is John Krafcik, a certified car-guy.