Marc Andreessen is an entrepreneur and investor who co-founded the web browser company Netscape and currently runs one of the most successful venture capital firms in the world, Andreessen Horowitz. Andreessen wrote an essay in The Wall Street Journal titled "Why Software Is Eating the World," which we think should be carefully studied by those of us in the architecture, engineering, and construction (AEC) industry. The AEC industry is about to undergo a revolution, and an understanding of the trends identified by Andreessen could be the most significant competitive advantage an AEC firm can have in the coming years.
Here are our top three takeaways from Andreessen's essay.
1. Innovation Changes the World
Andreessen lists many different companies in his essay, including Amazon, Netflix, Pixar, Google, Walmart, and FedEx. Each of these companies changed their industry in big, dramatic ways, and those industries aren't going to go back to doing business the way it used to be done. Innovation has changed the value provided by those industries.
We're also only at the beginning. As Andreessen illustrates, "Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale." It takes time for technology to mature, but it happens quickly once it starts; the beginnings of a lot of technology weren't that long ago. Most of the existing building stock in the world, for example, is still older than the invention of the modern Internet. In a historical context, we are only just beginning.
2. Other Revolutions Are Relevant
Many successful companies are actually software companies, integrated into an industry. FedEx is a software company that happens to have a distribution network of hubs, planes, and trucks. Amazon is a software company with a software model that can sell virtually any product online. Pixar is a software company that uses animators in a digital workflow to produce entertainment. Successful companies that are disruptive are integrally tied to their software.
All of these companies are relevant because they all share a common tactic in their success: They used software to scale. Without software, none of the companies could have optimized workflows enough to achieve massive growth.
3. The Revolution Is Coming
What does this all mean for construction and AEC?
In AEC, the limiting factor has always been people. During project interviews for new work, the people projected to be on a project are the single most important part of any presentation. When projects become complex, you staff the best people. The amount of work you can take on as a firm is directly related to the number and productivity of the people at your firm, which is why people are an essential part of construction and AEC.
Successful, disruptive companies all achieved scale using software, but in construction and AEC, the limiting factor is humans. Disruption, therefore, will occur when we tackle large workflows and revolutionize the productivity of people in AEC and construction.
Some day soon, there will be companies that won't be architecture firms or engineering firms or construction firms. There will be software firms, which use technology to deliver AEC services faster, cheaper, and better.
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